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Credit Score
A credit score is a number that indicates how likely a borrower is to repay future debts. Credit scores speed up the mortgage approval process for many people because they identify low-risk borrowers quickly. The higher the score, the better.
Each credit report includes the following data, collected from creditors and public records:
* Identifying information (name, address, employer, Social Security number, etc.)
* Debt and payment history on credit cards, student loans, consumer loans, car loans, etc.
* Previous collections
* Tax liens, judgments and bankruptcies
* Inquiries for new credit
This is how payment and debt information ranks in your score:
* Payment History: 35 percent
* Amounts Owed: 30 percent
* Length of Credit History: 15 percent
* New Credit: 10 percent
* Types of Credit Used: 10 percent
These factors are NOT considered in credit scoring systems:
* Income
* Race
* Religion
* Gender
* Marital status
* Nationality
* Age
* Receipt of public assistance
If you have had credit problems, be prepared to discuss them honestly and come to your application meeting with a written explanation. Every lender knows there are unavoidable reasons for credit lapses, such as unemployment, illness or other financial strains. If you have had a problem but have worked with your creditors to correct it, and your payments have been on time for a year or more, you’ll probably have nothing to worry about.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Tips to Building a Good Credit Score is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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