Mortgage Refinancing Improve Your Credit Score Before Applying

Credit scoring companies refuse to fully disclose how they calculate your score; however, there are steps you can take to improve your credit score before mortgage refinancing. Credit scoring agencies simply put your information in their computer and out pops your credit score. Here are several tips to help you improve your credit score before mortgage refinancing and qualify for a better interest rate.

For $12.95 you can visit Fair Isaac’s consumer website at myfico.com and view your credit score generated from your Equifax credit report. Unfortunately, the number from myfico.com is not enough to fully assess the state of your credit. Mortgage lenders use scores from all three credit reporting agencies to gauge how much of a risk you are for lending. If your credit scores vary from one credit agency the next you could wind up paying a higher interest rate when mortgage refinancing.

What Should You Do About Your Credit Scores?

The best thing to do before mortgage refinancing is request copies of your credit reports from each of the three reporting agencies (Equifax, Experian, and Trans Union). You can get all three reports free once per year from annualcreditreport.com. Once you have your credit reports carefully review all three reports for errors. Any mistakes or negative information such as a judgment will significantly reduce your credit score. If you find mistakes in your credit reports you will need to dispute them with each credit reporting agency responsible for that error.

You can learn more about your mortgage options, including costly homeowner mistakes you need to avoid by registering for a free mortgage tutorial.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing - What You Need to Know,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

This entry was posted on Wednesday, December 27th, 2006 and is filed under Mortgage Refinance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.