Review Your Credit Report

Review Your Credit Report

Check Your Credit Score When Preparing to Apply for a Mortgage

When applying for a substantial amount of money such as a mortgage, the first step anyone should take should be to make sure all your credit scores are the highest they can be.

Your credit report is primarily based on your trade-line and payment history, debt levels, and other information gathered by the three credit bureaus (Experian, Equifax and TransUnion). From that they calculate your credit score and assign a number between 300 and 850. 850 is the best.

Lenders use that score to determine whether to accept a loan application and the rate they will charge. That’s why it’s important to make sure your information is correct. You’re entitled to a free credit report once a year from each of the three credit bureaus.

Breakdown of Credit Scores and What They May Mean to You

700+ Credit Score – Excellent

A credit score over 700 means excellent or very good credit. Basically, the higher the score the lower your rate because you’re considered less risk to the lender. Your credit is or near flawless!

680 – 699 Credit Score – Good
A score in this range means good credit. You should be able to qualify for most loans but you may be paying a slighter higher rate than those offered to borrowers with excellent credit. You may benefit from a professional credit analysis.

620 – 679 Credit Score – Fair
Although a credit score in this range is still considered okay by many lenders, you may not get approved as easily as a borrower with a higher score. You probably won’t qualify for the best rates either. Your credit may benefit from credit repair.

580 – 619 Credit Score – Poor
Scores in this range are below average (subprime) and you’ll have a tough time getting a loan or even a credit card. If you score in this range you should work to improve your credit score because you’ll be paying higher interest rates just to get credit approval. Your credit is in need of repair.

500 – 579 Credit Score – Damaged
A credit score in this range usually means you’ve had a collection, charge-off, a foreclosure or a bankruptcy. Your credit is in need of repair.