Credit Scores and Home Loans

wayne-picBefore lenders make the decision to give you a loan, they want to know that you are willing and able to repay that mortgage. To understand you ability to pay back the loan, they look at your income and debit ratio. To calculate your willingness to pay back the mortgage loan, they consult your credit score. Fair Isaac and Company built the first FICO Score to help lenders assess creditworthiness. You can learn more on FICO here.
Credit scores only assess the info contained in your credit reports. They don’t consider your income, savings, down payment amount, or factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. “Profiling” was a dirty a word when these scores were first invented as it is in the present day. Credit scoring was envisioned as a way to consider only what was relevant to a borrower’s willingness to repay a loan.

Your current debt load, past late payments, length of your credit history and a few other factors are considered. Your score considers both positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will raise it.

Your credit report must contain at least one account which has been open for six months or more and at least one account that has been updated in the past six months for you to get a credit score. This history ensures that there is enough information in your credit to assign a score. Some borrowers don’t have a long enough credit history to get a credit score. They should spend some time building credit history before they apply for a loan.

At Atlantic Coast Mortgage Group, Inc., we answer questions about Credit reports every day. Call us: (843) 444-5626.

The information in your credit report has a huge impact on whether or not you qualify for a mortgage loan and what interest rate a lender will offer. Therefore, it’s important your credit report reflects a positive image of the way you manage your money. If you’re getting ready to buy a home, checking your credit report is the best way to ensure you get the loan and interest rate you deserve.

The easier way to see what’s in your credit report is to contact the three national credit reporting agencies – Equifax www.equifax.com, Experian www.experian.com and TransUnion www.transunion.com – and request a copy from each. That’s because the three agencies are independent of each other and the information may differ on all three reports. In addition, you may not know which agency your lender will use to check your credit. So it’s best to verify that all three have correct information about your credit history.

If you’ve been denied credit, insurance, or employment because of information in your credit report from any of the three agencies, you can obtain a free credit report by contacting the agency within 60 days of receiving a denial notice. In addition, you’re entitled to a free copy of your report each year when you certify in writing that (1) you’re unemployed and looking for a job within 60 days, (2) you’re currently on welfare, or (3) your report contains errors due to fraud. Otherwise, the agencies charge a fee for a copy of your report.

For additional fees, each agency may offer you different report variations, such as:

  • A credit report with or without your credit score.
  • A three-in-one credit report that lets you see a side-by-side comparison of records, from all three agencies, with or without scores.
  • Notification services when your credit history is requested.
  • Routine notification changes to your file.
  • Subscriptions that allow you to access your report on a regular basis.

At Atlantic Coast Mortgage group, we make loans easy!  Give us a call today at (843) 444-LOAN (5626) if you are looking for a Myrtle Beach home loan or call (803) 252-LOAN for home loans in Columba.  Want to get started? Apply online now at www.acmg.info.