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Sunday, January 13, 2013

What is your credit score and why is it important?

What is your credit score and why is it important?

My best one sentence answer to this question is... The old saying about past performance being a pretty good indicator of future performance is held in the highest esteem by lenders.

There was a time not so long ago mortgage lenders got creative and, if one could fog a mirror, was able to obtain a mortgage to buy a home.

That is no longer the case.

I am not a credit expert or in the mortgage business so I will not attempt to explain how the score is  calculated   In general though, it involves an evaluation of timeliness of payments, debt load (including type), length of credit history, and amount of available vs. used credit.

The credit score is not the only factor used used in the mortgage approval process.  Other important factors include employment history, the specific property (appraisal), the type of mortgage (conventional, FHA, VA, etc.).

If you are considering buying a home in the future it is never too early to talk with a qualified mortgage professional. (Again, I am a real estate agent only but would be happy to offer a few local Brevard County lender contacts if requested.)

As for the score and its impact on a loan, lenders base their decisions on their own criterion.  But one thing is certain, the higher the score the lower the interest rate offered, if approved.

Having a high credit score doesn't just happen.  It is the tool you will be measured by as long as you live.

Understand the reason behind your credit score and from where it is derived.  Monitor your credit report and correct any inaccuracies - before you need a loan for a new car or new home.

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