Fairlsaac Corporation came up with FICO Scores. Fairlsaac is one of the best at managing credit. Their creation has become an industry standard for figuring out if a person deserves credit. The score is based on your payment history, your credit history, which includes how many credit checks have been done on you over time, how much credit you have actually used, and what kind of credit you are using.
Your history is graded by the score. It gives an overview of how you pay your bills. If you pay your bills on time, your credit risk score will be low. On credit reports, you can see your FICO score. If your score is below 500, you have to pay more for a mortgage. If your score is higher than 700, you can get better rates on loans.
Here are some ways to improve your score:
- Pay for your health care. Your credit score will go down if your account is turned over to a collection agency.
- Don't be late with your bills. When you pay late, it hurts your credit score.
Pay off your student loans. Your credit score will go down, and the government will find you and make you pay this obligation.
- Since the number of questions you ask affects your score, fewer questions are better. The assumption is that if you have asked for credit more than once, you have been turned down.
Each of the three major credit reporting agencies will give you a copy of your credit report once a year. This is possible because of a federal law. In the report, your credit history will be laid out for you to look at. Correct all errors. When you find a mistake, you should tell the creditor and all three agencies. For the mistake to be fixed, the credit must send a letter. You have to keep up with this process. If you have bad credit when you need to get credit, it will make it harder for you to get financing.
Lenders want to see that you have at least three open credit accounts that are more than a year old. Keeping long-term accounts will be very helpful for you. Don't be late with your bills. Pay off loans with high interest rates and high credit card debt first. Don't spend as much as you can on your credit card.
You can get pre-qualified for a mortgage loan before you look for a place to live. Most of the time, this is done verbally and for free. Once you have a mortgage that has already been approved, it's easy to fill out an application. This loan agreement is legal, and it should speed up the closing on your home. The best of the two is "pre-approved," which is the same as "pre-qualified." This approval lets you know how much you can buy and how much you can really afford.
Your real estate agent can point you in the right direction to begin the loan application process.
