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Understanding Credit

What's my score?

Knowing your credit score and what information is contained in your credit report is invaluable when it comes to obtaining a mortgage loan. Not only is your interest rate partially driven by your credit score, but it also affects other aspects of your mortgage loan including how much you can borrower and what loan program you can use. The higher your score, the more options you have for your mortgage loan.

To qualify for a mortgage loan, lenders look at your credit score (or FICO) from each of the three credit bureaus: Experian, Equifax and Transunion. They isolate the middle of the three scores and use this as your qualifying or mid-FICO. For example, if your credit scores are 757, 782 and 801 then lenders use the 782 to determine your qualifications.

Items contained on your credit report can also change your qualifications for a mortgage loan. Often outstanding judgments or collections need to be paid prior to closing your loan. There are also waiting periods for qualifying for a loan from the time you filed bankruptcy or had a foreclosure on your credit. These dates and other information are pulled directly from your credit report so it’s important for you to know what’s on there when applying for a mortgage loan. Even if you can’t qualify for a loan today due to credit hiccups, your loan agent can help you identify items on your credit report to help get your credit back on track.

Many companies advertise that you can get your credit report and score for free.
They don’t always tell you that they will charge you for their services if you don’t cancel within a certain timeframe. They also sometimes only look at one credit bureau, when all three bureaus need to be examined for any potentially negative information.

The Fair and Accurate Credit Transactions Act (FACT Act) allows for you to receive a truly free credit report once every 12 months from all three credit bureaus. The bureaus individually charge a small fee for your credit score, but it is nominal compared to what other “free” credit report services charge.

The website to obtain your free credit report is www.annualcreditreport.com. Once there you will be directed to each credit bureau through their secure site to receive your individual credit reports. You can also dispute any items directly on the credit bureau websites.

Once you have your report in hand, we can help you determine what everything means and what you can do to improve your score if needed. If you have any questions when pulling your report, one of our expert loan agents will be more than happy to assist you. You also have the option of coming into our offices to have someone help you pull your free credit report and immediately review the report with you to discuss your mortgage loan options.

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