Do you know your credit score? Many people do not know this information. Yet, your score is an important piece of information because it directly impacts the amount of interest you are charged when you take out a mortgage loan.
There are a number of different factors that impact your score. For example, if you make late payments on your loans or if you a large number of loans, your fico score may be impacted negatively. Therefore, it is important to pay your bills on time and to spend money wisely in order to make sure you have a high fico score that will help you qualify for a lower interest rate.
FICO scores generally range from 300 to 850, with 850 being a perfect fico total. Getting a FICO Score that is this high is very rare, but a score ranging anywhere from 760 to 850 is considered to be excellent. If you fall within this range, you will qualify for the best interest rates available. In general, they are broken down into the following groupings:
- 760 to 850 (Excellent)
- 700 to 759 (Very Good)
- 660 to 699 (Good)
- 620 to 659 (Good)
- 580 to 619 (Average)
- 500 to 579 (Below Average)
- Below 500 (Poor/High Risk)
If your credit rating is low or below average, it might be a good idea for you to work at improving it before you make a home purchase. In that way, you will be able to qualify for a lower interest rate. At the same time, with the help of FiveStarHomeMortgages and in conjuction with buckscountyrealestateagent.com , you can still get a lower interest rate even if it is less than perfect.
Fortunately, there are several things you can do to improve your fico score. Obviously, it is beneficial to pay your bills on time. Even being late by just a couple of days can have a significant impact on it. You should also avoid applying for too many credit cards because even applying for a credit card can cause it to drop.
Acquiring too much debt can also lower it. Creditors refer to this as your debt to income ratio. Essentially, having too much debt as compared to your income will hurt it. Even having too much available credit can be viewed negatively. After all, if you have a large amount of credit available, there is a risk that you could run up a whole lot of debt that you cannot afford to pay.
It is also important to check your credit report every year. The government has passed legislation that allows you to get a free report every year, so take advantage of this opportunity and check your report and make sure all of the information is accurate. Even a small people of inaccurate information can negatively impact your credit score.
If you do have a lower score, you can probably still get a mortgage loan. It does mean, however, that you will likely receive a higher interest rate than someone with a higher score. In fact, people that fall in the "high-risk bad credit score service" category often receive interest rates that are twice the rate of those with high credit scores. Some lenders will also charge higher application fees to those with lower scores.
With the help of FiveStarHomeMortgages, you don't have to wait to purchase the home of your dreams. Our professionals will work closely with you in order to help you get the best mortgage loan with the lowest possible rate. Contact us today to learn more about how we can help you!