Credit Scores and How They Work

When purchasing real estate or any other large items like cars or boats, your credit rating is the single most important factor in you getting the loan. It is also very important when you want to open department store cards or major credit cards.

So, what is a credit report. First all major carriers of debt like banks, mortgage companies, department stores, credit card companies etc. report every one of their customers credit to the three major credit reporting agencies every month. These three reporting agencies are 1). Experian, 2). Trans Union and 3). Equifax.

When you apply for credit, the lender will pull a credit report. When you apply for a home mortgage the lender will pull what is called a tri-merge credit report. This means that the report includes all three credit bureaus in one credit report. You can also pull a one bureau which is mostly used for apartment rentals, department stores etc.

When the lender receives your credit report the first thing they look at is your scores. These scores are commonly called your FICO scores. FICO scores ranges from 350 to 800. Needless to say the higher the better. A FICO score above 720 will normally get you any type mortgage you desire. Each credit bureau has a different way they score your credit and it is rare that any two scores are the same. So mortgage companies use the middle score to rate you. They kick out the high score and the low score. There are exceptions to this but they are few and far between.

If you have a problem with your credit we can help you improve your scores over time. Many people pay large fees to improve their credit scores. For the most part you can do exactly the same thing by yourself, it just takes time and energy. An improvement in your credit score can lower the interest rate you qualify for. Sometimes it is very advantageous to raise your score by just a few points.

We can help with this. Our staff has the knowledge to show you exactly what to do to increase your credit scores. It is also possible to buy a home even with bad credit. We can help you with our lease option programs.

If you have any questions please contact us.