A credit score or credit rating represents a person's capacity to settle a loan or pay back borrowed money. It is a numerical value derived mainly from previous payment history, frequency of loan applications, types of credits applied for, time length of credit history, and unpaid outstanding debts.
It is also oftentimes called the FICO score, which is the acronym of Fair Isaacs Corporation, the developer of the software used in calculating credit scores. When applying for a mortgage, this will play a huge part in the application process.
It would serve a good purpose to be properly updated with your credit score when trying to apply for a mortgage financing. It is recommended that you obtain your credit report and credit score form TransUnion, Equifax, and Experian six months prior to application to ensure your credit status is in order and eliminate errors that would result in a low credit score.
A strong credit score is indispensable when applying for a mortgage. This is the primary basis for banks and lending establishments to determine whether you are eligible for a loan and for how much.
Usually, credit scores of 760 and above are considered the top tier scores. Having high scores mean that lenders will be more willing to give you better deals such as lower interest rates and more choices on your loan, which will translate to bigger savings down the road.
A credit score of 620 and lower falls into the subprime category. The effect of this is that, in general, one will expect to get higher interest rates and lesser choices on the type of loans.
Just having a bad score is not the kiss of death though. You will find some institutions who look at other factors, such as your income and how much you have saved, and they will moderate their decision based on these other factors.
Also, don't forget that your credit rating is not forever. You can work on it so that it gets better, by paying of credit cards and getting out of debt, your rating will get better.
It is also oftentimes called the FICO score, which is the acronym of Fair Isaacs Corporation, the developer of the software used in calculating credit scores. When applying for a mortgage, this will play a huge part in the application process.
It would serve a good purpose to be properly updated with your credit score when trying to apply for a mortgage financing. It is recommended that you obtain your credit report and credit score form TransUnion, Equifax, and Experian six months prior to application to ensure your credit status is in order and eliminate errors that would result in a low credit score.
A strong credit score is indispensable when applying for a mortgage. This is the primary basis for banks and lending establishments to determine whether you are eligible for a loan and for how much.
Usually, credit scores of 760 and above are considered the top tier scores. Having high scores mean that lenders will be more willing to give you better deals such as lower interest rates and more choices on your loan, which will translate to bigger savings down the road.
A credit score of 620 and lower falls into the subprime category. The effect of this is that, in general, one will expect to get higher interest rates and lesser choices on the type of loans.
Just having a bad score is not the kiss of death though. You will find some institutions who look at other factors, such as your income and how much you have saved, and they will moderate their decision based on these other factors.
Also, don't forget that your credit rating is not forever. You can work on it so that it gets better, by paying of credit cards and getting out of debt, your rating will get better.
About the Author:
The writer has been contributing articles on credit checks for the past four years. Furthermore, the individual takes pleasure in blogging regarding New York neighborhoods and helping people figure out where to live in NYC.