Protect your credit score while shopping for a loan.
If you plan to apply for a home loan soon, it’s likely you’re aware that your FICO credit score is one of the main factors considered by lenders when they assess your ability to repay that loan. Did you know that every time someone does a credit pull – or “inquiry” in financial lingo (see sidebar) – on your score, there’s a chance that your rating could decrease? It’s true. But by understanding how the credit bureaus view these inquiries, you can help minimize their effect on your score, which may improve your chances of being perceived by lenders as a good credit risk.
Credit Inquiry?
Each time a business checks with the credit bureaus to learn your credit score, it’s called an inquiry. Only the inquiries made when you make application for new credit could change your FICO score.
Things you can do to help lessen the chance of your score going down:
- Limit your loan shopping “window” to 30 days – If you’re shopping for a home loan, do so over a relatively short period of time. You want to avoid the chance of your report showing that you are constantly looking for credit.
- Avoid opening new credit accounts – Opening new accounts or charging on your credit cards can lower your credit score and affect mortgage ratios.
- Put off large purchases – If you’re planning to make a loan application, it’s a good idea to delay large purchases, such as cars, furniture or appliances.
You may have heard that credit standards have changed since the financial crisis. While that’s true, you may be in a better position than you think to start the process of buying a home. A great place to start is to know your credit score and consult with us.
What is a FICO® Score?
Your FICO score is one of the many factors that lenders consider to determine if they should lend to you. Scores from three different national credit bureaus are used to calculate your FICO score; Equifax, Experian, and TransUnion. You’re entitled to a free credit report once every year.
FICO scores range from 300 to 850. A higher FICO score could qualify you for a better interest rate.
How to improve your FICO Score
View your credit report – review your report for any errors or mistakes that were reported. If you find any errors, notify the credit bureau and the reporting agency to get them corrected.
Reduce your credit card debt – Consult a reputable licensed credit counseling agency to guide you in removing your credit card debt. Ask them about why canceling any credit cards can have a negative effect on your score.
Make payments on time – If you have trouble remembering when to make payments, set up reminders or electronic payments. Make sure that you are paying your account balances down, not just moving your debt around from one account to another.
Applying For a loan Just Got Easier!
Three ways to apply for a loan:
- Apply Online: Click here to get started!
- Call It In: Just call our office – we will answer your questions and give you the information you need to explore your loan options.
- Stop By Our Office: One of the best ways to learn about your loan options is to drop by and chat with us. We can help you get started with your loan applications in just minutes.
Contact us today to get started with your application, and discover how we can help make your dream of homeownership come true.