Whether you’re in the process of purchasing or refinancing a home, buying a car, or even purchasing new appliances, you’ve most likely had a credit history obtained. Your credit history and your credit score are one of the most important factors in determining approval for a loan.
Specific to purchasing or refinancing a home, your credit history says a lot, including current credit obligations, balances, delinquencies, bankruptcy, public records and inquires. All of these factors not only will determine if you qualify for a loan, but can greatly impact a favorable interest rate on that loan.
Your credit score is based on your credit history, and is determined by the three major credit bureaus; Experian, Equifax and Transunion. Your score is essentially broken down by these categories:
Payment History: 35%
Total loan balances: 30%
Length of credit history: 15%
New Credit: 10%
Type of Credit: 10%
Most credit scores range from 300 to 850. Your score is based on different factors of your history, and some will weigh more heavily than others in calculating your score.
So why is a credit score so important? It affects how much money you are able to borrow. As a lender, we will look at those factors and determine our risks giving you a loan. For more information about credit scores and the role they play, feel free to contact one of our mortgage loan specialists.