If you wish to get a home mortgage, there are actually a lot of factors that need to take into consideration to determine the mortgage rate. One of the main factors is your credit score.
Credit Score Calculation
Credit score is actually calculated by using the FICO which is a company that means Fair Isaac and Co, who put together the formula to determine your credit score. If you get 700s as your credit score rating then you’re in really good position. And if you have a bad credit score and want to improve to the 700s, this means you shouldn’t delay your bill payment but need to always paying your bills on time. Besides, you need to eradicate all negative things in your credit rating report to improve your credit score. By gradually doing such practice, you will finally reach the highest credit score that you want.
Negative things on your credit report can be things like late payments, defaulting, or bills that you didn’t pay off. The first action that you need to take is you need to get rid of all these negative things at once so you can improve your credit score and you do not need to worry about negatives anymore. One action you could consider of putting in action is to make sure you pay off all your bills each month on time. For your credit card usage, as long as you do not max out your credit card and pay them off in full every month, this indicates you’re actually in better position compare to many people.
In case the negatives that you have in your credit rating report are not your fault or actually you are not aware of their existent then you may faced trouble to get rid of them. What can be considered as best step for you to take if the negative is not yours is to write a dispute and send it out to corresponding agency. You have to make sure that you send the dispute letter via certified mail to the consumer report agency where you are disputing on that specific negative. You should expect to receive a reply in writing from them regarding to your dispute in about a month.
If you are sure that you do not have any late payment or something that was caused you for the negative, then you will not able to have it removed by a dispute letter. What you only can do for this is just wait for the negative to get off by itself. After a period of 7 years, the negative going to be totally remove from your credit report. That’s actually not the worst of it. Nevertheless, in case you ever been facing bankruptcy then you will expect such bankruptcy information is going to remain in your credit report for 10 years.
Wishing To Get A Low Credit Score Mortgage
It is very unlikely you are going to grant for a loan even you are wishing you can get approve with a low credit score mortgage. With a home loan, you’ll expect to get a check on your credit report. You will only get your mortgage application approved with average to high credit scores.
If you’re indebted currently, you should now seriously come out a plan on how to reduce your debt and get rid of it all together. Besides, your term & condition of your mortgage is a factor when calculating your interest rate. In case you just getting a short term loan then normally you’ll need to pay just a smaller rate of interest since the mortgage term is shorter. If you’re applying for a loan and you are renting a house, then the rate of interest will be higher compare to those who own the house for living. However, if you wish to live in your house for just a couple months and then rent it out, you can possibly save some money. You got to make sure your mortgage lender to let you know all the hidden costs and fees that you may overlooked. All these fees are going to add to your total cost of the loan.
Therefore, it is truly important for you to keep your credit utilization ratio low in order for you to obtain a better credit score. It can be a good idea for having your free credit score check. You can always have your free credit score online. By doing so, you can rest assured that the credit report that you see is always up to date and is accurate if you carry out the report checking practice on a regular basis.