Credit Scores:
Your Guide to Qualifying for a Home Loan
What are Credit Scores?
Credit scores are numerical expressions that represent the creditworthiness of an individual. They are calculated based on a person’s credit history, including factors such as payment history, amounts owed, length of credit history, types of credit, and new credit. Scores generally range from 300 to 850, with higher scores indicating better creditworthiness.
Why is it Important to Have a Good Credit Score??
A good credit score is crucial for several reasons. It not only makes it easier to qualify for loans and credit cards, but also to get favorable interest rates on those loans. A high credit score may also help in securing better terms for insurance rates and provide more negotiation power when seeking a new loan. Some landlords and employers also check credit scores during their decision-making process, so a good score can make it easier to rent an apartment or get a job.
Factors that Impact Your Credit Score
Your credit score is primarily determined by five major factors:
Payment History (35%):
The most influential factor. It reflects whether you have paid past credit accounts on time
Amounts Owed (30%):
Also known as credit utilization ratio, it measures how much you owe compared to how much credit you have available. Lower ratios are better.
Amounts Owed (30%):
Also known as credit utilization ratio, it measures how much you owe compared to how much credit you have available. Lower ratios are better.
Length of Credit History (15%):
Longer credit histories tend to increase your score. It includes the average age of your accounts and the age of your oldest account.
New Credit (10%):
This includes both the accounts you’ve recently opened and the number of hard inquiries on your credit report. Frequent new credit events can negatively affect your score.
New Credit (10%):
This includes both the accounts you’ve recently opened and the number of hard inquiries on your credit report. Frequent new credit events can negatively affect your score.
Credit Mix (10%):
A mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans is usually beneficial.
Credit Reports
You are entitled to receive a free copy of your credit report from each of the three major credit reporting agencies once every 12 months. This right is granted by the Fair Credit Reporting Act (FCRA), a federal law designed to promote the accuracy, fairness, and privacy of consumer information in credit reporting.
The three major credit reporting agencies are:
3. TransUnion: TransUnion is the third major credit reporting agency. To get your free credit report from TransUnion, you can visit their official website and follow the instructions to verify your identity and request your report. Click HERE to request your credit report from TransUnion.
It’s important to note that while you can access your credit reports for free from these agencies, this does not include your credit score. Your credit score is a separate numerical representation of your creditworthiness that is often used by lenders to assess your credit risk.
Reviewing your credit reports regularly is a good practice to monitor for any errors or unauthorized activities. If you find inaccuracies, you have the right to dispute them with the credit reporting agencies to have them corrected.
Have some questions? Text us at: (480) 400-0942
About Starboard Financial
Starboard Financial is a full service lender offering a variety products to meet all home financing needs.
We underwrite upfront which makes closing much smoother and simpler for our customers and partners.
We’re in the people business and provide a wide variety of loan programs with great rates and next-level customer service.
The closing date is not a suggestion, it’s everything!
Experience the Starboard Way today!
About Starboard Financial
Starboard Financial is a full service lender offering a variety products to meet all home financing needs.
We underwrite upfront which makes closing much smoother and simpler for our customers and partners.
We are in the people business and provide a wide variety of loan programs with great rates and next-level customer service.
The closing date is not a suggestion, it’s everything!
Experience the Starboard Way today!
“It’s about relationships and creating easy transactions!”
Mark Blodgett - Owner
“It’s about relationships and creating easy transactions!”
Mark Blodgett - Owner
“It’s about relationships and creating easy transactions!”
Mark Blodgett - Owner
info@starboardfinancial.com 4145 E Baseline Rd, Gilbert, AZ 85234 | NMLS# 156931 NMLS Consumer Access
© 2021 Starboard Financial Management, LLC – Mortgage Made Easy
© 2021 Starboard Financial Management LLC – Mortgage Made Easy
