14 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 14 Number 1 www . LynchburgRealEstateBrowser . com
Credit Basics You Need to Know
By Sherry Brady , Branch Manager , Apex Home Loans , Inc .
NMLS # 217258 Cell ( 434 ) 238-8984 sbrady @ apexhomeloans . com
Whether you are a first-time homebuyer , or you ’ re about to purchase your fifth home , there is one thing that we all have in common : the need for good credit . What is your credit score ? Do you know what things you might be able to do to improve it ? How much will your credit score impact the type of loan you qualify for , the interest rate you get , or whether you ’ ll be able to get a loan at all ? If you are considering buying a home within the next 12 months , here is what you need to know .
Your credit score is the one of the primary factors that will determine what type of loan you can qualify for and what your interest rate will be . If you are self-monitoring your credit , you should have a good idea of what your credit score is but be prepared for seeing the score that a mortgage lender gets when they pull your credit will likely be different . The reason for this is that there are different scoring models and the one that a mortgage lender uses , is likely different than what you ’ re seeing . Don ’ t let that worry you though . If you know how to manage your credit , you can figure out what you need to do to improve your score or keep the great score you already have .
If you ’ re planning to buy a home soon , chat with one of our licensed lenders to start the process . With your permission , we will access your credit report and score and advise you what loan types you will qualify for based on your score , and other factors such as your income and assets . We will also let you know if there is anything on your report that needs to be cleared up . If everything is accurate though , and your score is still lower than you ’ d like , we may be able to advise you of some things you could do to improve it .
There are several factors considered in the calculation of your credit score , but just two things make up 65 % of your score ! They are : do you pay your bills on time ? and do you use revolving credit responsibly ? ( i . e ., are your credit cards “ maxed out ”?). Obviously , you know why it ’ s important to pay your bills on time , but why does not maxing out your credit card limits matter so much ? Because if your credit cards are charged up to their limits , this gives the appearance that you may not be able to manage your credit wisely and perhaps that you are even using credit cards to live on . Other than paying off any collections or delinquent accounts , paying down credit cards is the area where most people can have the greatest impact on their score .
Other things that impact your score are how many inquiries you have . Multiple recent inquiries can lower your score . Also , you should have at least two or three tradelines reporting for at least 12 months ( ideally at least one installment and one revolving account ), and of course , be sure to pay everything on time , including your rent , which you should pay by check or direct debit so you can prove the payment history .
Whether we like it or not , our credit score plays a role in everything we do these days – from buying a home , to your insurance rates , to getting a job . One thing is for certain : good credit doesn ’ t just happen , and today , more than ever , it ’ s important to actively manage your credit rating .
By Sherry Brady , NMLS 217258 , Branch Manager , Apex Home Loans , a division of Celebrity Home Loans , LLC , NMLS # 227765 , www . LynchburgLender . com , 434-237-1027 , ( www . nmlsconsumeraccess . org ), Equal Housing Opportunity