Mortgage rates are at record lows right now. As home buyers look to purchase a home or homeowners look to refinance, your credit score plays an important role in determining your mortgage rates.
Are you creditworthy?
When a potential homeowner applies for a mortgage loan or a current home owner wants to refinance, the lender pulls their credit report to determine their creditworthiness. The credit report includes previous and current accounts, payment history and possible negative items such as accounts in collections or bankruptcies.
A high credit score can mean a lower mortgage rate
Your credit report also includes your credit scores, which are main factors in determining the mortgage rates you can receive. Usually, credit scores in the excellent range give you access to the lowest interest rates. This can mean the difference between hundreds of dollars more each month for your mortgage and tens of thousands of dollars more over the lifetime of your mortgage loan.
Know your credit scores
Be prepared for homeownership by monitoring your credit report and your credit scores. You should know your scores from all three major credit bureaus – Experian, Equifax, and TransUnion. Also, it’s important to know what credit score model your lender is using. According to Fair Isaac Corp., 90% of top lenders use FICO® Scores.
Credit monitoring services can allow you to stay on top of your FICO® Scores along with the added benefit of identity theft protection with monthly alerts for suspicious activity and new credit inquiries. Now you can work toward your home-buying goals.