Understanding Your Credit Score

What Is A Credit Score?

When lenders evaluate a loan application, a process called underwriting, they try to evaluate your ability and willingness to repay the loan. They judge the borrower’s ability to repay by reviewing the income and stability of past earnings. This practice helps the lender to determine if the borrower can afford the loan payments. The review of past credit history is used to judge the willingness of the borrower to repay the loan.

Lenders want their evaluation to be as accurate, objective and consistent as possible. To help achieve this goal, home mortgage lenders use credit scores to assist in the underwriting process. Credit scores are numerical values that rank individuals according to their credit history at a given point in time. A credit score is based on past payment history, the amount of available credit, and other factors. According to Fannie Mae and Freddie Mac, two large investors in mortgage loans, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan.

Credit scores are just one of many factors considered in the underwriting process. The lender will review the many components that make up the financial situation of a borrower. Even when a credit score is low, there are other factors that could overcome the negative credit issues and satisfy other underwriting criteria.

Click HERE to read more. As always, please feel free to call me anytime with your real

estate questions and needs.

Stacy Schnell – Realtor Associate – Cell : 856-364-0772

How to improve my credit score

  1. Keep balances low on credit cards and other “revolving credit”. …
  2. Pay off debt rather than moving it around. …
  3. Don’t close unused credit cards as a short-term strategy to raise your scores.
  4. Don’t open a number of new credit cards that you don’t need, just to increase your available credit.
If time is a factor, here are four ways to improve a credit score in 30 days:
  1. Correct any errors on the credit report. …
  2. Become an authorized user. …
  3. Raise your available credit. …
  4. Negotiate. …
  5. 1. Make minimum payments on time. …
  6. Reduce debt-to-income ratio. …
  7. Have a good mix of debt.

Call today for more information on how to get yourself prepared to purchase a

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