Your Credit Score is a Very Important Factor When Purchasing or Refinancing Your Home
Your overall credit picture includes your credit report and your credit score. Your credit report alone does not give your lender enough information to make a decision. That’s where your credit score comes in. Your credit score takes the info in your credit report and creates a number that represents many things such as your payment history, length and type of credit, how much credit you use, how much credit you have available and how many times other lenders and creditors have pulled your credit information.
Although the components of your credit score don’t change, different credit reporting companies may interpret the information differently, leading to different credit scores.
Maintaining a good credit score can mean big savings when you purchase or refinance.
Each credit score model has a set of ranges that help determine your creditworthiness. FICO (the Fair Isaac Corporation) is the most popular credit score provider. To a lender, your score equals risk. The lower the score, the higher the risk. Credit scoring is a predictive model of how you will or will not make payments on time in the future, based on past habits. You may have some influence over the factors that contribute to your score, but it won’t be overnight.
