Understanding Credit and your Credit Score
For a happy home buying experience in Elgin and the Fox Valley area, you’ll want to find out what a lender sees on your credit report. Finding out that you have a low credit score when you go in for your home mortgage can do a lot of unexpected things. First, it can lower your chances of getting a reduced rate (APR). Second, it can lower the amount a bank will approve you for and it can increase your payments above a comfortable level due to excessive high interest. Get some background information on your credit history by getting it checked before you go out to get your loan by filling out a brief survey here: http://articles.moneycentral.msn.com/Banking/your-credit-score.aspx
Here are Experian’s guidelines on risk factors to on determine your credit score:
Low Risk (726 – 830): Lenders rest easier when they extend loans and credit to individuals with high Credit Scores. Plus, you may be able to save money by negotiating a lower interest rate or a better term on a new loan or credit card.
Low – Medium Risk (700 – 725): Lenders may be more willing to extend credit to individuals with Credit Scores in the low-to-medium risk range. In this range, you may get better-than-average rates and terms on new loans and credit cards.
Medium Risk (626 – 699): Lenders may still be willing to extend loans and credit to individuals with mid-range Credit Scores; however, you may only get average rates and terms.
Medium – High Risk (551 – 625): Lenders may be less willing to extend credit to individuals with Credit Scores in the medium-to-high risk range. In this range, you may not enjoy the best rates possible.
High Risk (330 – 550): Lenders may be wary about extending loans and credit to individuals with Credit Scores in the high-risk range. You may be denied credit, or pay much higher rates.
Don’t forget, Experian is only one of three credit reporting bureaus. TransUnion and Equifax are also authorized to report on your credit history.
If your score comes in low, take steps to improve it. You can clear old data by making payments on time, keeping balances low and not overextending yourself on existing lines of credit. Talk to a financial advisor for more ways to get on the fast track to excellent credit today!