Higher Credit Score = Better Mortgage Loan
If you take out mobile home loans, you are required to pay interest. The monthly mortgage interest payment that you make may be very high for you. Here it is to be noted that the one important determinant of home mortgage rate is your credit score. Higher credit score implies that the rate of interest on the mortgage loan will be lower and vice versa. Because better credit score helps you get a better mortgage loan.
How The Score Affects Your Home Loan
A slight change in the mortgage rate results into significant change amount of money. Credit score not only determines whether or not you are eligible to get better mortgage rate but it also determines whether or not you are eligible to get a loan at all. If you have a credit score below 620, it becomes difficult for you to get a home mortgage loan. Irrespective of your assets and income, your credit score is perhaps the most important factor determining the mortgage rate. Though credit score may go up to 850, any credit score more than 740 will make you eligible to obtain a mortgage loan with better terms.
Lenders prefer a borrower with high credit score. Lenders take into consideration various things in your credit report such as your outstanding debt, your demand for a new credit, length of your credit history etc. Your income and assets are also taken into consideration while judging your creditworthiness.
You may think that your have a clean credit report. Despite that you need to check your credit report at least one year before purchasing a home. First of all, you need to obtain your free credit reports from the three leading credit rating agencies Experian, TransUnion and Equifax. Your credit information provided by these rating agencies may vary widely. If you ask for the report from the credit rating agency itself, you may be charged some fees.
Lenders take these reports very seriously. Lenders will take the middle score.
Clean Errors Off Your Credit Report
You must also check your credit report carefully and find out whether or not there is any incorrect information. Study conducted by a reliable source reveals that nearly 37% of the borrowers find some incorrect information in their credit report when they check their credit reports. In case you find incorrect information in your credit report, you are free to dispute those errors. You need to report those errors to the credit rating agencies. Once those errors are corrected, your credit score receives a boost. Also you need to check whether your name and address have been keep correctly in your credit report.
All these measures will clean up your credit report and your credit score will also improve. With improved credit score, you will have better chance to obtain a mortgage loan with better terms.
So What Is The Next Step?
If you will do nothing.. don’t expect anything to happen. You must bump your credit score up! It will give you better leverage when facing the lenders, and better negotiation position when applying for any financial need.
Lets not forget you are probably paying $500-$1000 extra per year in higher interest rates, and credit payments.
If your score is below 700, you might want to clean it yourself – get this ‘Credit Repair University’ which will save you money and time.
Yes, you might need to invest a small sum to get a grip of things.. But if you think education is expensive.. try ignorance..
You are probably paying thousands of dollars per year in fees and interests to credit companies which could be going straight to your pocket.
Don’t be cheap when it comes to financial education.. Ignorance costs you more.