The Mortgage Learning Center
One of our passions is education. We believe that knowledge is power. Since buying a house is likely the largest financial decision you make in your lifetime, it is important that you feel like you have a handle on it. While we prefer to sit down with you in person when you are buying your first home, we also felt it was important to create a place on our website where you could get all the information in one place. From credit scoring, to interest rates, closing costs, down payments, how to structure your contract and just about any subject relating to home buying or obtaining a home loan, we have it covered. Enjoy our vast library of material but don’t forget to get with us in person so we can educate you as it relates to your own individual situation.
Order a Free Credit Report (annualcreditreport.com)
To get the truly free report that you are entitled to each year, go to wwwannualcreditreport.com. There are many that give you a free report if you sign up for xyz services. This site is strictly for you to order what you’re entitled to. It is entirely your choice whether you order all three credit file disclosures at the same time or order one now and others later. The advantage of ordering all three at the same time is that you can compare them. (However, you will not be eligible for another free credit file disclosure from that particular credit reporting agency for 12 months.) On the other hand, the advantage of ordering one now and others later (for example, one credit file disclosure every four months) is that you can keep track of any changes or new information that may appear on your credit report. Keep in mind that you will not get your score this way (they are not free) but you will know if there is anything “fishy” going on.
ABC’s of Credit Scoring
When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you. FICO scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scores can help you qualify for better rates from lenders.
For a complete description of what makes up your score, we have provided you a link within myFICO.com to assist you in better understanding your score. I call it the rules to the game! If you know the rules, it is much easier to play and play well. It’s about time someone shared! Go to www.myfico.com
Is there more than one score?
There are three major credit reporting agencies. Each of them have their own score, Equifax has a Beacon score, Trans Union has a Empirica score and Experian calls their score a Fair Issac. Creditors report your activity to one or all of the three agencies. Some creditors will only report to one of the three which is why there are inconsistencies between the three credit reporting agencies. This is why it is important to check all three reports periodically.
Lenders look at each of your scores from the three major credit bureaus. They then use the middle of the three scores (or the lowest middle score of two borrowers) when the actual score dictates whether a loan is eligible for a certain loan program or for what rate a borrower is entitled to.