Real Estate and Good Credit Scores

Whenever anyone applies for a mortgage to buy real estate, the lender wants good credit scores. This condition leaves many applicants duly frustrated as they don’t possess what is called a ‘good credit score’. According to Experian your lender will most likely see a good credit score in his credit score model if you also have a good credit score.

This brings us to the next and most important question. What is a good credit score? This can mean different numbers depending on the credit bureaus and the loan officers. However, generally most lenders use the FICO scores when considering mortgages. According to FICO 45% of Americans have a credit score ranging from 700 to 799.

Credit Report

 

Anything higher than 799 is deemed excellent. Most lenders used to offer a home loan for a credit score of 700, although presently, the minimum required by many lenders to give the lowest mortgage rates is 740. Additionally, what is considered as a good credit score differs from the criteria of each loan officer. Some lenders might consider 800 to be a good score, while others might see 740 as a good score.

More on www.credit.com.

Why do you need a good credit score?

Your credit score tells the lender some important information about yourself. They will be taking a huge risk by lending you money. Your credit score and your credit history will show them how responsible you are in handling your finances. It tells them:

  • whether you meet your commitments
  • whether you make regular payments
  • whether you max out your cards
  • whether you are a risk to the lender

These information will help him understand if it is profitable for him to give you a mortgage as they are more interested in knowing if there is a likelihood of your mortgage being repaid.

How will a good credit score help your mortgage application?

A good credit score tells the lender you are a financially responsible person while it also brings many benefits to you when negotiating a mortgage. An exceptionally good credit score like more than 800 means:

  • You can get lower interest rates and
  • you can get better options

A score more than 740 and less than 800 will get you competitive interest rates and make you eligible to receive the best deals available. Depending on the lender, you can also receive the same perks given to those with a score greater than 800.

CreditScores real estate

If you have missed a good credit score by a few points, here are some factors you should consider before taking remedial action.

  1. Analyze and discover what you did incorrectly. A closer look at your credit report will show when an activity or a transaction negatively affected your credit rating. For instance by purchasing a particular product like a washing machine, with your credit card could have maxed out your credit card. Studying the causes and taking action to pay back the same within 30 days will improve your credit scores.
  2. Identify inaccuracies in credit report: – any inaccurate information must be brought to the notice of the credit bureaus and proved with supporting evidence to rectify the same. Correcting a discrepancy can improve your credit score to a certain extent.
  3. Increase available credit. The percentage of available credit to your credit limit is vital to the lenders. You could either get an enhanced credit limit or take necessary action to repay balances.

If you don’t have a good credit score, you should make haste to rectify your mistakes so that you become eligible for a mortgage. To check your scores you should order your free copy by visiting annualcreditreport.com or call 1-877-322-8228. Alternatively you can fill out the Annual Credit Report Request form and send to:

Annual Credit Report Request Service,
P.O. Box 105281,
Atlanta,
GA 30348-5281