Now is the time to improve your credit scores so you can get the best loan that is available on the market at the time that you are ready to buy or refinance your house.
There is so much information out there that would help you to improve your credit score, but the first thing that you have to do would be to find out about your credit score. There is a free website (www.annualcreditreport.com) where you can obtain your current credit score. The higher the score, the better it is for the consumer, because a high credit score can translate into a low interest rate. This can save thousands of dollars in financing fees over the life of the loan.
The Five Factors of Credit Scoring:
1-Payment history 35%, has the greatest impact on your score. Late payments will have a negative impact.
2-Outstanding credit balances 30% which is the ratio between the outstanding balance and available credit.
3- Credit History 15% Credit score indicates the length of time since a particular credit line was established.
4-Type of credit 10% Auto loans, credit cards.
5-Inquiries 10% The numbers of inquiries made on a consumer’s credit within six month period.
Lenders estimate your ability to pay back money based on yor credit score. The credit score is a computerized calculation. Personal factors are not taken into consideration when a credit report is generated.