TV commercials, Internet banners and even radio ads bombard consumers with information about their credit scores. Free credit score check here, know your credit score there, so much money is spent on people knowing their credit score but what does it all mean? What exactly is your credit score and how can it impact other aspects of your finances?
Your credit score is a 3-digit number that is used by financial institutions to determine a customer’s creditworthiness for various things like loans, mortgages and credit cards. A credit score can be a main factor in determining whether or not you are approved for a loan/mortgage/credit card and what interest rate you will be charged. Credit scores range from 300, which is extremely poor, all the way to 850, which is considered to be “superprime”. A good credit score is typically anything over 720, but many institutions take other factors into consideration when determining whether or not to approve someone. Individuals can do many things to improve their credit score such as paying bills on time, keeping balances low on credit cards, pay off balances rather than relocating the debt, and only open new accounts if necessary. A poor credit score can really impact your life so it’s important to know what it is and how it is affected.
Impact on Mortgages
First off, many lending institutions use a customers credit score as an indicator of how creditworthy they are and if they should be approved for the credit they are asking for. A poor credit score, to lenders, usually indicates potential problems. A customers credit report also offers valuable information to lenders and a few things they look for are low balances, long history of on-time payments and a mix of credit uses, like car loans and credit cards. Customers with a credit score of 740 or more are often able to secure the lowest interest rates offered by lenders on mortgages. On the other end of the credit scale, customers with a credit score of less than 620 will struggle a great deal securing a mortgage. However, some will offer non-conforming home loans. Loans that receive this label often include factors like credit history issues or poor credit score, too much debt in relation to income, or a down payment of less than 20% (which affects the loan-to-value ratio). When it comes to monthly payments on mortgages, it’s easy to see just how a single percentage point difference can save a homeowner thousands of dollars over the life of the mortgage, all because of a good credit score.
Getting Your Arizona Home Loan
It’s easy to see just how much a 3-digit number can impact your financial life, but by following some simple tips and living within your means, you too can get a credit score that will allow you to become a homeowner. For more information about Phoenix mortgages and loans, visit www.novahomeloans.com.