One of the primary factors that will be considered by lenders when trying to get a mortgage is your credit score. Through the process of determining the risk involved in giving a loan, lenders need to know the status of your credit. If your score is good you can get a lower interest rate on your mortgage. For a look at the ways your credit score will affect your mortgage, La Grange Illinois Realtor Kate Boyle has some insights.
What Is A Good Credit Score?
In general, credit scores range from 300 to 850. If your credit score comes back over 700 you are in good shape when it comes to applying for a loan. If you are under this, lenders may consider you to be high risk. A score of 740 or above will enable you to get a good interest rate. You can find out your credit score by utilizing free online credit reports. Your lender will also run your credit when applying for a mortgage.
Ways to Improve Your Credit Score
There are a number of things you can do to improve your credit score. First, try to get rid of credit card balances. Paying off the balance each month is good and making multiple payments each month is even better. If this is not possible, try to get them as low as possible. It is also a good idea to space out applying for credit. This is because every time you try to get a line of credit for something your credit score drops slightly. Another helpful practice is to pay all of your bills on time. Consistency is key when it comes to building your credit and this is something that happens over an extended period of time.
Getting a Loan with a Low Credit Score
The first thing you can do if you have bad credit is to find out if the reason is due to errors made by creditors. Analyze your credit report carefully and inquire about anything that doesn’t look right. You’ll then need to contact the appropriate creditor to have the issue fixed. If everything checks out on the credit report you can look into getting a low credit score home loan. An FHA loan is one example of a loan you might be able to get. This can also get your down payment significantly reduced. Another option is to simply put more money down on the house. This down payment may convince the lender to go ahead with the loan. For more help buying your next home contact La Grange Illinois real estate agent Kate Boyle!