by Amy Lillard
(7/30/2012) In the midst of one of the most uncertain real estate markets in history, it’s more important than ever to be informed. In a continuing series, we take a look at some of the most pressing questions about mortgages, refinancing, home equity, and other real estate options available to you.
As homeowners try to take advantage of record low interest rates to refinance, and new buyers look to purchase a home at affordable rates, credit scores become an important topic of conversation.
When applying for any loan, whether it’s a mortgage, car loan, or a credit card, lenders assess the risk of extending funds. They rely on credit scores, which range from 300 to 850, to help them determine if a potential borrower is a safe bet. The higher the credit score, the more likely borrowers will qualify for loans at good terms and rates.
A credit score, also called a Fair Isaac and Company (FICO) score, is actually a combination of three different credit reports issued by Equifax, Experian, and TransUnion. While other credit bureaus exist, many lenders use this system.
What makes up a credit score? A number of factors will figure into the three digit number, including:
A credit score is not the only piece of information used in determining eligibility for loans and optimal interest rates. But it is an important component. Consumers are advised to keep an eye on their credit score and their credit report in order to achieve and maintain the best standing possible.
For additional reading:
7 Nasty Credit Myths That Won’t Die: http://money.msn.com/credit-rating/7-nasty-credit-myths-that-will-not-die-weston.aspx
Raise Your Credit Score to 740: http://money.msn.com/credit-rating/raise-your-credit-score-to-740-weston.aspx
Follow the link to continue reading the related articles.
Understanding Mortgages: What is Refinancing?
Understanding Mortgages: What are FHA Loans?
Understanding Mortgages: What is Private Mortgage Insurance?
Understanding Mortgages: Mortgage Terms
Understanding Mortgages: Types of Mortgages
Fully free credit scores long overdue
New credit scores for mortgages coming for better and for worse
Lenders to Start Disclosing When Credit Score Affects Rate Quote
Site to See: Federal Reserve's 'Credit Reports and Credit Scores'