NJ Mortgage Consultant: What You Need to Know About Your Credit Score

When you start the process of searching for your new home or are thinking about refinancing your current mortgage, you inevitably hear many things mentioned about your personal credit score. A qualified NJ mortgage consultant can give you the guidance you need to make you more comfortable with how the credit score factors into your loan process.

Your credit score is a number representing an analysis of your personal credit files. The score is used by banks, lenders, credit card companies, and insurance companies, to evaluate the potential risk of lending money to you. In addition, it determines qualification for loans, helps establish interest rates, and credit limits. When you’re ready to purchase a new home or refinance your current one, a NJ mortgage consultant will review your credit score in detail with you and give you a pretty good idea of how your personal credit score affects your personal mortgage process.

A NJ Mortgage Consultant Can Help Interpret Your Credit Score

The most common credit score was created by Fair Isaac Co. and it is called the FICO score. FICO produces scoring models that are the most commonly used, and are distributed to the three largest national credit repositories in the United States (TransUnion, Equifax, and Experian).

Your NJ mortgage consultant will review with you that FICO credit scores range from 300-850, with 723 being the median FICO score of Americans in 2010. In essence, the FICO risk score is supposed to represent the statistical likelihood that you will go 90 days past due or worse. Therefore, the higher your score, the less likely you go 90 days past due.

Ultimately, your NJ mortgage consultant will highlight that the interpretation of a credit score will vary by lender, industry and the economy as a whole. In the past, a score of 620 was usually the divider between a ‘prime’ or a ‘subprime’ mortgage loan – but now, all scores are considered with specific regards to the current status of the economy, and more specifically therefore how likely banks or mortgage lenders are willing to take risk loaning to borrowers of different scores. This can be complicated, so seeking the council of a NJ mortgage consultant will definitely help to clarify and personalize the process.

Advice from a NJ Mortgage Consultant to Help Your Credit Score

If you consult a NJ mortgage consultant and find that your score is not high enough, here are a few fast fixes:

1. Get a credit card if you don’t already have one and look for a card that reports to all three credit bureaus.
2. Add an installment loan to your portfolio.
3. Pay down your credit card balances.
4. Limit your credit card usage because the balances of your most recent statements are reported to the credit agencies.
5. Ask for a “goodwill adjustment:” if you’ve been a good customer, a lender might agree to erase a late payment from your credit history. This request may have to come in writing, but it never hurts to ask.