Tuesday, July 12, 2016


          Living in the United States, it is very important to fully understand the credit system. From cars, to furniture, to a house, we use our credit for almost every major purchase. A house is no exception. Your credit plays a very crucial role in determining your mortgage rates because based on your Credit Score, the lenders or the creditors will determine your qualification. There are different factors which are measured in points, and the total number of points is what a lender will use to predict how likely it is that you will repay a loan when due.

          A credit score is a number, generally ranging from 300 to 850. It is assigned to you to rate how risky of a borrower you are--the higher the score, the lesser the risk you create to creditors, and they can give you better rates Conversely, the lower your scores, the higher the risk to the lender, and your rates won’t be as good.

A score of

  • 750-850 is considered excellent,
  • 660-749 is considered good,
  • 620-659 is considered fair, and
  • 350-619 is considered poor

What effects your credit score ?

  • Past Payment history (35%)
  • Amount owed (30%)
  • Length of History (15%)
  • Types of Credit in Use (10%)
  • New credit (10%).
Just remember: a poor score costs you more.

          Also, your credit future depends upon your credit history. So review your scores at least three to six months prior to shopping for a loan, so you'll have time to improve your standing before approaching a lender.

How to Improve Credit Score

  1. Check your reports from credit bureaus for accuracy once a year and correct if necessary.
  2. Pay your bills on time. This is always a good practice to increase score.
  3. Reduce your credit card balances. Generally, it's good to keep your balances at or below 25-30 percent of your credit card limit.
  4. Pay off debt rather than moving it around for lower rate. Closing out an account and transferring the balance will hurt the score.
  5. Don’t open a lot of new accounts over short period of time or don’t open one at all if don’t need to.
  6. A credit card or installment loan can raise your score as long as you don’t have high payoff and the debt is paid timely manner
  7. Do not co-sign for anyone if you don’t have to. (you don’t know if they will pay bill or not on time)
If you want the best loan, make sure that your score is the best it can be.

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