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Mortgage 101: Credit Scoring

Your credit score is a factor that will be considered by the lender when they look at your loan application. The lender will want to know what your credit history is, and whether you have the ability to pay back the loan you are asking for. In short, a good credit score translates into a lower rate for the home buyer and represents less risk to the lender.

Credit scores can range between a low score of 300 and a high of 900. Most commonly, we deal with scores ranging from 400 to 800. The higher the client’s score is, the less likely they are to default on their loan. The lender will run a credit report and determine what your credit score is, and if necessary, will point out some simple ways to help you improve your credit score without enlisting the help of a credit repair service.

Once you fill out a loan application and enter into the loan process, you should not run up your charge cards! This would have an adverse effect on how the underwriter looks at your file.

With a poor credit score, it is still possible to qualify for a loan. There are loan programs available even if you’ve had a recent financial problems. While you may not get the interest rate or loan program you had hoped for, it is an opportunity to start building up your credit again.

Once you begin making mortgage payments on time and in full, your credit standing will improve and a lender can seek to refinance you at a lower rate and/or a better loan program as soon as the opportunity arises.

?Submitted by America One Finance

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