Credit scores are by now a well-used and determining factor in a family getting credit of any kind. Never before have they been so important when it comes to qualifying for a mortgage loan.
Even though we know we have them, they are difficult to understand. The black box that generates our credit scores is different for each of the three credit bureaus, and most people do not know what factors create the final number. Credit scores are important and as such are worthy of attention.
Credit scores are affected by the amount of credit, the timeliness of payments, how extended the credit is (total amount available vs. total amount used), and other items such as inquiries, bankruptcies, foreclosures and more.
The good news is that credit scores are malleable and can be worked on by the consumer to improve them. Some fixes are short-term, others take longer, but with a good consultation a game plan can usually be put into place to help improve scores.
Mortgage loan programs are very diverse in what they will allow. Some government-backed programs like FHA and VA are forgiving of scores, lending sometimes to recipients with scores as low as 580. For the best pricing, and to avoid punitive rate adjustments, conventional loans are best when scores are over 720. Use one of the many tools available to see where your scores are, and consult with an industry professional to help you put together a recovery strategy if necessary.
Jayson Stebbins is a 23-year veteran of the Mortgage Banking industry. Contact him at (408) 825-0220 or at stebbinsmortgageteam.com
Â
