Credit Scores – How Much do They Matter with a Mortgage?
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Credit Scores – How Much do They Matter with a Mortgage?
- 1. CREDITSCORES
- 2. Buying a home is a large transaction for both the homebuyer and the lender.
- 3. Before a lender is going to approve a mortgage loan, the lender will need certain assurances that the borrower is a good risk for the bank.
- 4. The factors that are included in this determination are the borrower’s income, the cost of the home, the borrower’s DTI (debt-to-income ratio) and the borrower’s credit scores.
- 5. The borrower’s credit scores actually determine more than just the borrower’s ability to be approved for the loan.
- 6. Here is some information on how important credits scores are for a mortgage.
- 8. Your credit score is a three-digit number that is determined by five different factors, and each of them plays a certain role in what your final credit score will be.
- 9. This is how well you pay your bills on time. PAYMENT HISTORY – 35%
- 10. This is how many debts you currently have and the amount of credit utilized in comparison to available credit. CURRENT DEBTS – 30%
- 11. This is how long you’ve had the credit accounts. CREDIT HISTORY – 15% NEW CREDIT – 10% This is any new credit accounts you’ve recently obtained.
- 12. This is the type of credit you have (mortgage, consumer loans, credit cards, etc.) Types of credit – 10%
- 14. Credit scores play an important role in determining if you’re approved for a mortgage loan.
- 15. They tell the lender more than anything else how you pay your debts and how you handle finances currently and in the past.
- 16. The number one thing that poor credit scores can affect is your ability to be approved for a loan.
- 17. However, even with low credit scores, you may still be approved for a loan.
- 18. What the low credit scores will do is affect the interest rate you’ll be charged.The better your credit scores, the lower your interest rates will be.
- 20. Credit scores play an important role with mortgage loans and an applicant’s ability to be approved for a mortgage loan.
- 21. When you visit a lender to apply for a mortgage, the first thing the lender does after having you fill out an application is checking your credit scores.
- 22. The scores on your credit report, probably more than anything else, will determine if you’re approved for the loan.
- 23. In some cases, an individual may be approved for a mortgage loan even with low scores if there have been changes in the debts or certain circumstances have changed.
- 24. However, in most cases, the credit scores are the important determining factor in if a homebuyer is approved or denied a mortgage loan.
- 26. It’s very important that you take advantage of the free credit report you can get each year. Even if you think you know your credit, there may be a mistake on the report.
- 27. It’s better to find the error and have it fixed before you see a lender rather than later.
- 28. Errors can happen for different names. Individuals who are Jr. and Sr. may have their debts listed on the wrong account.
- 29. If there is a numerical error in your social security number or account number, that can also result in an inaccurate credit score.
- 30. You may have a debt listed as unpaid when it’s actually been paid. If you see an error, you can contract the credit reporting agency and report the error.
- 31. Get another of your credit report in a month or two to ensure the error has been fixed.
- 32. Mortgage Originator Jimmy Vercellino specializes in VA loans, helping veterans use their VAloan benefit to their greatest advantage.
- 33. He will make sure your loan goes through, explaining the process and helping you overcome any obstacles. When it comes to a VA loan, Jimmy and his team are your best friends!