Your credit score affects the rates on your mortgage
More today than ever before, our increasingly tight credit market demands a high credit score. Why? Over three quarters of all lenders use credit scores when approving loans or credit. It’s also used to determine your interest rate, the amount of your down payment and the variety of mortgage types available to you if you’re buying a house. The higher your credit score, the lower the interest rate. For larger loans, such as a mortgage, one point up or down in your score can add up to a significant amount of money.
The industry has changed over recent years as lending guidelines have become more restrictive making it harder to obtain loans.
|FICO Score||APR||Monthly Payment||Total Interest Paid||Extra Interest Paid from 760-850 Credit Score|
|* Based on a 30-year fixed mortgage of $200,000 according to May 2010 interest rates from myfico.com|
What Lenders look for on Borrower’s Credit Report:
- Outstanding debt
- Outstanding debt relative to the total available debt
- Length of credit history
- The pursuit of new credit
Lenders Prefer Borrowers With:
- Low balances on credit cards and loans
- A long history of on-time payments
- A mix of credit utilization (a couple credit cards, a car loan and a mortgage.
Getting a handle on your credit report and history is critical if you want to live free and have the kind of future you’ve dreamed and worked hard for. Let a Financial Education Service Agent help you improve your credit.