Monthly Archives: December 2011
Credit Score- And Buying a House
Back in the year 2005 if you plan of buying a house what you need is to have a stable kind of job and your Social Security System Number. Fast track to the present time there is a greater need more than ever to have an excellent credit score for such a big kind of loan such as a housing loan. You are in dire need to clean up on your credit scores before you apply for such a loan. Before you eagerly start house hunting you better get recent copies of your credit report.
It is better to ensure that you have combed every line and check on the information on your credit report for errors. If in case you find out that your scores are less than conducive for a home loan you will have ample time to improve your credit score. Apply for a house that you can afford. You can make a good estimate of your financial standing by the use of online calculators that will help you see what you can afford to pay.
Some private lending institutions can offer you a lower mortgage. That is if you are willing to pay at least 3% of the purchasing price as down payment. It is wise to buy in a place near schools because if ever you made a decision in the future to sell this property you can profit from it since parents love to buy houses near their children go to school. You can also get professional help rather than rely on the small amount of knowledge that you have about such things. Ask for referrals on such buying agents that are concern about what is best for you and not just the profit that they can derive from closing up the sale.
It will not hurt if you ask for an assessment of your capability to pay for a house. This is what we call as pre-approval process wherein you allow the lender to look at your income and credit history to determine if you are qualified to take on that loan. Besides your buying agent you need the help of a home inspector who will assess the house if it can lasts longer or if it needs a lot of repairs.
In summary, if you are somebody who is starting your own family it is better to check out the right score to be given good deals. Credit scores that belong to the higher range like 750 and above will cause you an average APR of more than 3% as oppose to having a bad credit score that can cause you 5%. By looking at the comparative percentages you can see that both bad and good credit scores have the potential to move your interest rates in a significant manner. Avoid applying for new credit while you are applying for home loan since this might affect your credit scores. If you are somebody who moves from one place to the other because of your work you might choose not to buy a house for the time being.
Difference between Credit Score and Credit Report
At one time or another people often interchange the word credit score with credit report. Credit report is a snapshot of your credit history. Your credit report has your personal information, the kinds of credit that you use such as credit cards, credit line history and some other negative marks such as bankruptcy. It also contains if you pay your bills on time or if you are always late in doing so. The law has allowed you to have access on your credit report and gives you a once a year free copy. One thing that you need to do to ensure that your credit report contains the right information is to monitor it on a yearly basis.
If in case you are planning to file for a huge loan and you have a bad credit score you need to ask for a quarterly copy. This is true if you are making an action to improve your credit scores. Credit scores on the other hand are scores that range from 300 to 850 which is from the lowest to the highest. They are seen in your credit report. The most commonly use scoring model is the one that FICO (Fair Isaac Corporation) uses. Next one is the VantageScore which is the brainchild of the three major credit bureaus.
The major credit bureaus are Experian, Equifax and TransUnion which the law has assigned to closely monitor your credit report. In theory, all of the bureau should produce the same credit report but the reality is that since some companies prefer to report on one or two credit bureau only, the outcome is not as ideal. When prospective creditors look into your credit report, they usually get the average result to arrive at the decision on whether they will lend you that loan or not.
Credit scores are useful for your most of your loan and credit applications. Right now even potential employers and landlords are joining in the line to base their decisions on your credit report. Your credit score is what indicates whether you will be seen as a credit risk or not. No one knows exactly how credit scores are calculated but we are given some factors that play a vital role in determining how high or low your credit scores will be. If you pay your bills on time, you got a long credit history, have your new credit applications, available credit lines and a mixture of different types of credit, this will give you a good credit score.
In summary, your credit score is not just your average numbers but the basis and the lifeblood of your credit report. Your credit worthiness depends on your credit report that contains your credit scores so better take care to see to it that you have done your part in improving them. If in case you got a good credit score right now, you can still make your scores better until it reaches an excellent footing. Good credit scores can open doors of opportunities for you that were otherwise close when you got a bad credit score.