Real Estate Loans......
Credit Score Not Up to SNUFF?
REinfo4me.com
You'll end up Paying through the Nose!
Credit Scores started being used on real estate loans about 1995.
It has become the most important factor when you apply for a MORTGAGE.
There are other factors LENDERS will take into account like: Length of time on a job.
Your Salary.
Your Occupation.
Employment History
Your Age.
Child Support
Alimony
Rental Contracts
Interest Rates being charged on your credit cards.
FICOŽ Scores: are proprietary credit score numbers ranging from 300 - 850 and developed by Fair, Isaac & Co.
This is the most common credit score used by LENDERS to evaluate the risk involved in your real estate loan
Your FICOŽ is not the "be all and end all" in getting your mortgage, but it weighs heavily in the process and will effect your interest rate tremendously.
Here is a snapshot of interest rates for one day in 2006 and how your credit score affects them.
760 - 850 = 5.9%
700 - 759 = 6.12%
680 - 699 = 6.3%
660 - 679 = 6.51%
640 - 659 = 6.94%
620 - 639 = 7.49%
The median score in the U.S. is currently 723.
The average score in the U.S. is currently 678.
The difference in payments on a $250,000 real estate loan is about$300 more monthly for the lower FICOŽ score!!!
However, if you do have a really, really low credit score, you might want to check out this website.
You can get financed, but it will obviously cost you more!
Guaranteed Bad Credit Financing
A word of warning! Watch out for PREDATORY LENDING PRACTICES. Some lenders, or their agents, prey on the uninformed, low income and high risk borrowers.
So, how do I improve my credit score?
Your FICOŽ is based on the information in your credit report and public records.
Credit Reports: Everyone is entitled to a FREE annual credit report.
Free Annual Credit Report
You should check what's on your report way before you are thinking of buying real estate.
That way, there will be no surprises and you can have the time to dispute any inaccuracies in the report.
When shopping for a real estate loan, do it all in a very short time frame as it will then count as only one inquiry on your score!
Checking your own credit report directly does not affect your scoring.
DO NOT let anyone run your credit unless you are loan shopping.
Too many inquiries will negatively impact your credit score.
Public Records: This is where any bankruptcies, judgments and liens against any real estate and/or youself will appear.
 
Your FICOŽ score is not part of your credit report.
To get your FICOŽ check the link at the end of this page.
There is an inexpensive service you can sign up for through Equifax that monitors your credit score and lets you know when it changes, up or down. This will help let you know when you are likely to get the best interest rate.
There are some companies who will help you dispute any inaccurate information if you are getting frustrated in trying to do it yourself.
The most helpful are consumer credit counseling agencies which you can find in the phone book.
There is no legal way to "repair" your credit, so be careful of businesses offering to do this.
It could end up costing you hundreds, or even thousands, of $$ to no avail.
You cannot legally remove justified derogatory items no matter what they tell you.
The only legit way to try to get rid of the negative items is to contact the company you owe the debt to and pay what you owe. You can ask them to report the account to the credit bureaus as paid in full.
However, this will not necessarily remove the item(s) but it will show that you are making good on your obligations.
BE CAREFUL!!! There are some rip-off artists around who will promise to remove LEGITIMATE negative items from your report. This is fraud and could land you in trouble as well as costing you big bucks!
Cancelling credit cards will not improve your credit score, in fact it may lower it.
The reason is that you now have a higher debt to available credit ratio because there are less cards to spread it around.
The BEST thing to do is pay down your balances as early as possible before you apply for your real estate mortgage.
WARNING!!
Do NOT make ANY major purchases like a car or furniture on credit before AND AFTER you apply for your real estate loan!!!
Many people think that once their loan is APPROVED, they don't have to worry about their credit score and they have the green light to go ahead and spend for their new home like there is no tomorrow.
WRONG! Your lender will run another credit report just before closing.
By spending extravagantly on credit, you will have increased your debt to income ratio and you may not even qualify for the loan!
FICOŽ looks at the following information in order of weighting:
1. Your payment history: Do you pay your bills on time, or are you always late or in arrears?
2. Amounts owed: Do you have higher than average debt? If so, Pay It Down NOW!
3. Length of credit history: How long have you had credit? Do not close old credit cards. This gives you more of a history. Keep them active but you can pay them off.
4. New credit: Do not apply for any new credit cards or credit of any kind except your real estate loan.
Having lots of new credit cards without any seasoned payment history, raises a red flag.
5. Types of credit: If you have had credit extended to you at a higher than normal interest rate, this shows that the credit grantor considered you a high risk.
Fair, Isaac & Co., or their approved vendors, are the ONLY source for your genuine FICOŽ score. Click on the link below to get your score!
That's it for Credit, now let's go and get that MORTGAGE
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