Know Your FICO Score before you start your home search process.
The number one task to do on a home buyers list is to know your credit score. A good credit score allows you to qualify for better loan programs and interest rates. This is important because it could save you thousands of dollars over the life of your home loan.
FICO measures credit-worthiness. Underwriters have determined that people with low FICO scores default on loans with far greater frequency than do their higher scoring peers, so they use three credit bureaus — Equifax, Experian, and Trans Union — to determine your score in several ways:
1. Delinquencies: A 30-day late payment is less risky than a 90-day late payment.
2. New credit: Your score drops when you open several credit accounts in a short period, as you may be unable to meet new credit obligations.
3. A long credit history is better than a newly established one.
4. A consumer with “maxed out” cards may have trouble with payments.
5. Public records: Tax liens and bankruptcies jeopardize a healthy FICO score.
6. The use of consumer credit counseling agencies may lower scores.
7. Small balances, no late payments show responsibility.
8. Too few revolving accounts: If you fail to use credit, there is no way to evaluate your ability to manage it.
9. Too many revolving accounts may mean overextension.
10. Credit scores affect interest rates. Some lenders establish lower interest for high FICO scores and vice versa.
All lenders are not the same, just like shopping for homes, a home buyer should also shop for loan programs and lending services. Call Shelley Arthur at 704-664-0438 for more information.