You can consider your credit score as your lifeline when it comes to home mortgages. The higher your score is, the better interest rate you receive, which then translates to a lower monthly payment. Now, it’s important to remember that your credit score is not just a mere number but is an estimate on how much trust lenders can place in you. Thus, this determines whether a lender will generally approve your application or not.
The most common credit score that you can look at without suffering from a hard check is the FICO score. To sum it up, this score calculates data from your credit report like your payment history, credit history, and how long you’ve had your credit for. This gives you a rough indicator on where you stand when it comes to the strength of your credit.
When it comes to a home mortgage, speak to a lender to see what type of credit score they’re heavily looking at – there are various different credit scores that lenders use. Each lender has their own strategy that they use to approve an application. For example, if you have a high FICO score, you may believe that you’ll receive the best interest rate that there is. But, if your lender is using the TransRisk Score instead, which goes up to 900, it may not be as impressive to them as it is to you. Understand that there is no industry-wide standard when it comes to credit scores. Each lender will use their own system. What you can do however, is attempt to raise your score as high as you can by paying your bills on time, maintaining a consistent schedule, and not loading up more debt.
Bio: Kuba Jewgieniew heads the real estate brokerage firm Realty ONE Group. With over 6,000 agents and 50 offices, you can be sure that they will offer an unprecedented level of service to you and your needs.