Refinancing And Your Credit Score
Refinancing your home can be a great way to take advantage of low interest rates and lower your monthly mortgage payments. To get the best rates, you'll need to have a good credit rating or credit score.
What Is A Credit Score?
A credit score is a number, or score, that reflects the information included in your credit report. Your credit score is used by lenders to help decide if you are a safe investment and to help determine your interest rate. Credit reporting agencies determine your credit score using your credit history, type of debts and your payment history. Bankruptcies and foreclosures also have an impact on your credit score.
What Is A GOOD Credit Score?
The most widely used credit score is the FICO Score created by Fair Isaac Corporation. Fair Isaac calculates the FICO Score based solely on information in consumer credit reports maintained at the credit reporting agencies. FICO credit scoring ranges between 380 and 850. Anything close to 700 is usually really good. Obviously, the higher your credit score the better.
Need help finding your score? Contact us now. We'll help you learn more about your credit score and how it might impact your decision to refinance.
Tips For A Strong Credit Foundation When Refinancing.
If you plan on refinancing in the near future, it's important to be aware of how your credit score can impact the process. Here are a few quick tips to help keep your credit rating in good shape.
Check your credit report for errors.
Many credit reports can have errors. If you find mistakes such as incorrectly spelled surnames, wrong street addresses or inaccuracies in your job history, write a letter to the credit bureaus and ask them to fix the errors.
Don't open any new lines of credit.
If you plan to refinance soon, reject the temptation to open any type of credit card account. Every time you open a new account, your credit score takes a hit. And don't apply for other loans before securing your new mortgage. Some people might assume that because a car is cheaper than a house, it's better to apply for a car loan first.
Pay down high balances.
Paying off some of your existing debt can help improve your credit score. But don't close out all your accounts right before refinancing. Keep some credit open like car loans, school loans and credit card accounts. These show the credit reporting agencies you know how to handle and manage your debt.
Don't pay anyone to fix your credit.
Beware of companies that want to "fix" your credit score or help you pay down debts. They might help you get your financial house in order BUT they can't instantly "fix" a history of nonpayment and delinquency. Watch out for companies that say they can.
Consult an experienced mortgage pro.That's us! We've been dealing with refinancing and credit reports for many years. Let us help you navigate through the numbers and find the best course of action for your refinance. Contact us now or fill out this quick questionnaire. We'll get back to you within a day to get you on the road to refinancing.