What is a Credit Score?
What Affects a Credit Score?
Keeping a manageable amount of debt and paying on time are ways to positively affect a credit score. Bankruptcy, judgements, collections and liens most negatively affect scores.
Scoring factors are “blind” and do not consider anything about an individual other than their creditworthiness. Credit inquiries can ‘ding’, or lower your score. However, any inquiries from one industry within a 30-day period count only once.
For example, if a consumer is car shopping and visits three dealers in two weeks who check the consumer’s credit, this only counts as one inquiry and has a minor affect on the credit score.
Mortgages and Credit Scores
Often, underwriters use credit scores as a factor in determining loan approval. This is not the only factor considered, but a credit score can weigh on the loan decision.
Good credit pays off. Some loan programs have credit score requirements or offer lower rates for higher credit scores. For example, a credit score above 740 may merit a 1/8% rate decrease.
Borrowers who are financially sound enough to buy a home should receive a “market rate” for their loan. Home buyers with scores below 680 may incur higher rates (1-2% above market) or additional fees.
Mitigating circumstances can help your approval process if you have credit issues. Your Paramount Bank home loan expert can help.