What a Credit Score is Really About

We all know that your credit history can influence a lender when an interest rate is being determined for your Hoboken home loan. Although other factors are considered when applying for a home loan, such as your income, debt and savings, your credit score is often the biggest factor in determining your risk as a borrower. A good score can often save a person hundreds of thousands of dollars over the life of a mortgage.

There are three main credit bureaus: Experian, Equifax and TransUnion. They collect information about your payment histories from banks and other financial institutions, retailers, savings and loans, and credit unions. From the information in your credit reports, a credit score is derived based on statistical analysis.

If you are concerned about increasing your credit score, the easiest way is to pay your bills on time every month. Basically, what the lender is concerned about is that he gets his money on time every month. About one third of your score is determined by your payment history and your debt-to-credit ratio makes up another third.

Something important to keep in mind is to make sure you don’t approach your credit limit. A good rule is to keep your balances below 30 percent of your limit. The final third of the equation that is considered is the length of your credit history, type of credit used and credit availability. Many times too much credit available to a buyer can be considered negatively by a lender.

Be sure to check your credit on a regular basis. The Annual Credit Report website offers consumers a free report from each of the three credit bureaus once each year.

Get your credit report under control, then for help in finding and closing on your perfect Hoboken home, contact Eddie Perez, Broker-REALTOR, CDPE. Eddie’s market includes Hoboken, a progressive city  where they’re always coming up with new ways of making it a better place to live, Jersey City, Weehawken and Union City. Eddie can also be reached by phone at 201-344-2886.


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