Exclusively Inverness Magazine - Fall 2007

 How Your Credit Score Can Affect Your Ability to Finance a Home

hether you are a first-time home buyer or you are planning to refinance your existing home loan, it is important to understand how your credit history influences the process. When you are being considered for a loan, the lender looks at your past payment history, the amount of credit you have outstanding and the amount of credit you have available—a snapshot of you as a borrower.

Mortgage lenders rely either on a consumer’s credit score, such as a FICO score developed by Fair, Isaacs & Company, or use a combination of FICO score and other factors to price a loan. Credit bureau information is used to obtain a number that represents how likely you are to make your loan payments on time FICO scores range from approximately 250 to 900, and in general, higher scores predict timely mortgage payments.

Your credit history directly affects the interest rate and fees (or points) a lender charges. Consumers with the best credit generally pay the lowest amount for a home loan. Building and maintaining strong scores may be as simple as improving your credit profile. Recommendations for doing so include:

• Making timely payments each month—The best way to increase a credit score is to pay bills on time.
• Paying off outstanding debt and limiting the amount of credit you use—Lowering balances on credit cards and lines, and keeping them low, raises a credit score.
• Requesting a lower credit limit on current credit cards to avoid high credit limits—High credit limits relative to income can adversely affect a score.
• Closing credit accounts limits the number of credit lines—An obligation to pay multiple accounts lowers a credit score. By consolidating debt onto two or three credit lines and canceling other accounts, scores can be raised.
• Checking credit reports periodically—Incorrect credit information in a credit bureau file may lower a credit score. The three major bureaus who provide reports for a small fee are Equifax (800-405-0081), Experian (800-682-7654) and TransUnion (800-888-4213).
• Not applying for credit you don't need—Whenever you apply for credit, the creditor will obtain a credit report from one or more of the three credit bureaus. Each such inquiry stays on your record and affects your score. This is because each inquiry suggests that you are increasing the amount of credit available to you.

While it may seem intimidating at first, understanding and improving your credit score is easier than you might think. And the time and effort you invest can pay off handsomely in lower home loan rates, lower monthly housing expenses and etter loan terms.

Tom Cramer is the Sales Manager of the Barrington office of Countrywide Home Loans, Inc., a national leader in residential finance. The office is located at 1250 S. Grove Ave. Barrington, IL Ph: 847/381-6521.

Chris Jacobs
Broker Associate
Chris Jacobs & Associates
Century 21 Circle
Direct: 847-401-4859
Chris@ChrisJacobsHomes.com

 INSIDE THIS ISSUE...

1. Midwest Bank
    
2. Letter from the Editor
    
3. 1732 Galloway Drive
   INVERNESS - For Sale
    
4. How Your Credit Score Can Affect Your Ability to Finance a Home
    
5. 1598 Bedlington Drive
   INVERNESS - For Sale
    
6. Abruzzo Kitchens, What Inspires You?
    
7. 108 Hillshire Drive
   INVERNESS - For Sale
    
8. June ~ September
   2007 HOME SALES
    
9. The Chris Jacobs Team
    
10. Countrywide Home Loans
     
11. 1019 Muirfield Road
    INVERNESS - For Sale
     
12. The Law Offices Of John A. Tatooles and Associates
     
13. 180 Bradwell Road
    INVERNESS - For Sale
     
14. 902 Middleton Lane
    INVERNESS - For Sale
     
15. 129 Colony Drive
    INVERNESS - For Sale
     
16. Channer Investment Management Inc.