Know Before You Go!

It’s important now more than ever that you, as a consumer, understand your credit before you apply for a loan. By now, most wage-earning adults in the US are aware of the term “tight credit” – the notion that lenders are lending or only giving the best loan terms, to the best applicants. Those with high credit scores, income, collateral, etc. are the “best applicants”. Credit scores can even impact the rate you pay on your car insurance and whether or not you can accept certain job offers.

The mortgage loan rate and fee you pay is determined by looking at a “pricing matrix” (another term that’s become more mainstream than anyone expected) that’s based on only a few things – your credit score being one of them. Specifically, your middle credit score. When you apply for a loan three credit scores are provided but the one with the middle value know as the “mid-score” is usually most important. Often the scores themselves can be +/-40 points different from one another which can be the difference between two very different loan rates and fees. Said another way, variations in your credit score can cost you $1,000’s at settlement and over time.

The good news is your credit score is one of the more controllable aspects of your loan application – here’s how you can control it so you are in better position to qualify or qualify for better terms.

  • Don’t do anything drastic. It’s not a good time to close accounts you’ve had open for a long time thinking that might help. The same goes for paying off all or some credit cards – often it’s better to keep a small balance on credit cards than a zero balance.
  • Get expert advice. What makes up your mid-score is complex and it changes over time. Make sure your lender uses software forecasting tools from CreditXpert Inc. so you can get a plan for the immediate, one and two month timeframes. Sometimes a little but very specific information can go a long way!
  • Don’t give up. You might not see results right away but don’t give up, in a month or two things can change for the better. Also, wealth creates wealth. Once you qualify for a lower mortgage payment you will have more money to pay-off or keep on top of other debts. Also, you will begin to see better terms on other things you apply for or receive offers for, like credit card balance transfers and auto insurance quotes.

Today, your credit score and credit report is more important than ever so it pays now more than ever to be informed. But you must know before you go! Don’t wait until it’s time to refinance or put in an offer on a house – see your lender early in the process and then ask them for your CreditXpert report. If they do not know what you mean, then ask them if they live under a rock. Then ask them to contact us at www.creditxpert.com or 800-500-8553.

Tim McQuillan is the National Mortgage Account Executive at CreditXpert Inc.

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