Your credit score is also commonly called a FICO® Score. It’s an analysis of all your credit files that together represent how credit-worthy you are. Here’s what goes into your score, and how it’s added up:
Most credit scores have a range of 300 to 850. The higher the better. A score in the mid 600 range is considered an acceptable score. Above that is considered good to excellent credit, which can mean lower interest rates and better terms. Someone with a score below 600 is considered high risk, which may result in a loan with a high interest rate and less favorable terms.
If a low credit score is keeping you from getting a better mortgage rate, here are some ways to improve your credit score:
Liens, garnishments and judgments can be indicators of an unstable borrower. It’s important to pay off your liens in full prior to closing. Even better, before applying for your loan. This includes tax liens. Standard property tax liens don’t have to be recorded as paid in full since they’re not yet due or payable. Be prepared to provide your lender with receipt showing anything outstanding was paid off, or letter with a satisfactory explanation describing why they might still be outstanding.
Outstanding child support payments must be brought current, and proof that they have been must be provided – there are no exceptions to this. A letter from an ex-spouse, or copies of personal checks, are not acceptable. Neither is an agreed-upon, but not yet completed, payment plan. Because of the seriousness of the delinquency/default, which in many states can result in jail, only a letter from the court or the legal authority responsible for collection of the payments in the city/state (e.g. district attorney, sheriff, etc.) is acceptable.
Need more help or additional ideas? Contact us online or call 978-422-2311. We’ll explain everything.
Licensed by the State of New Hampshire Banking Department- License Number 5430-MBR Premiere Mortgage Services Inc. NMLS #1498 is a licensed broker and not a lender. We arrange but do not make loans.