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Tip of the Day Be Patient

Be Patient - Your friend has just gone out and bought a state of the art computer with all the bells and whistles and after looking at your slowpoke old...

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Credit Score Home Loan

If you are looking at the prospect of obtaining a home loan, you need to understand your credit score, what to look for and what affects it. Home buyers who are seeking a mortgage find out early-on that their credit score plays an important part in the home buying process and in determining the interest rate that a lender offers.

Your credit score is a number that lenders use to estimate risk. Experience has shown them that borrowers with higher credit scores are less likely to default on a loan.

The three major credit agencies gather your credit information, plug it into a database and use a formula to determine your credit score, called a FICO, to determine your credit worthiness. They obtain this data from institutions which you done had business with, in the past including auto purchases, credit cards, and previous home mortgage loans. In addition any charge accounts such as department stores are included.

They tabulate all of you information and then use it to create a credit history. Your score is based on how well you meet your obligations, and if you miss or are late on any of your payments.

The three major credit reporting agencies don't necessarily use the same scoring software, so don't be surprised if you discover that the credit scores they generate for you are different.

When the credit bureaus compute your credit score they use the following breakdown of the approximate value that each aspect of your credit report adds to a credit score calculation. Use these percentages as a guide:

35% - Your Payment History 30% - Amounts You Owe 15% - Length of Your Credit History 10% - Types of Credit Used 10% - New Credit

Credit scores (usually) range from 340 to 850. The higher your score, the less risk a lender believes you will be. As your score climbs, the interest rate you are offered will probably decline.

Borrowers with a home loan credit score over 700 are typically offered more financing options and better interest rates, but don't be discouraged if your scores are lower, because there's a mortgage product for nearly everyone.

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Mutilated Security - Mutilated Security is a damaged security that prevents a person from identifying the original issuer of the security or other necessary identifying information. If a seller is seeking to transfer the mutilated security, certain steps will have to ensure the buyer that the security is able to...

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