Getting a mortgage is a very stressful event in a person’s life. It is usually by far the largest loan a person will get in their life, and getting a mortgage you can afford, with interest rates that will not cut you down, can be very difficult depending on your credit rating. The question most people will ask themselves is “How is my credit score affecting my potential interest rate?”
While many people ask themselves this question, most do not truly understand how their credit score affects their mortgage interest rate. All it takes is a small percentage increase on your interest rate and you pay thousands more. For example if you have a mortgage worth $350,000 and you pay seven percent in interest, you will pay an total interest payment of $24,500. However, if that interest rate is only three percent more at ten percent, then the interest payment you make in total is $35,000. That is an increase of $10,500 on what you pay throughout the life of that mortgage. All it took was a three percent increase on your interest rate.
So, how does your credit score affect your interest rate? If you have excellent credit of 760 to 850 on your FICO score, you will pay about 5.780 percent in interest based on 2007 interest rates. If your score is 700 to 759, you will pay 6.002 percent, and from 660 to 699 you will pay 6.286 percent. If you have the average FICO score, which is 620 to 659, you will pay 7.096 percent. Naturally, as you fall lower on the credit score scale, the amount you pay in interest will increase. If you are at 580 to 619, which is a fair credit score, you will pay 8.583 percent, while 500 to 579 will cause you to pay 9.494 percent.
It would be pointless to look at a credit score below 500 because there is virtually no way to get a mortgage with a credit score that is that low.This shows the importance of making sure your credit score is very good, rather than fair by using credit repair services. If your credit score is 760, then on that mortgage above you will pay $20,230. However, if you are only 260 points lower at 500, then you will pay $33,229. That is a difference of just under $13,000 and all it takes is a few missed payments on your credit card, a collection notice and having too many credit cards.Your mortgage rate is tied directly with your credit score. The lower your score is, the higher the interest rate will be. As a result, you want to make sure that you have very good credit before you try and get a mortgage. Even getting your credit report sent to you can help because it will give you an idea of what interest payments you will be making. Nothing would be worse than being surprised by the interest rate, and then struggling to pay it down the road. No one wants foreclosure, so be smart before you get your mortgage in order to avoid complications later.
If you or anyone else that you know would like more information regarding this post, feel free to visit http://www.creditrepairbydrjen.com or email drjen@creditrepairbydrjen.com
Sunday, November 9, 2008
Thursday, November 6, 2008
How do foreclosures affect your credit score?
Right now, millions of people are going through the pain of foreclosure as the sub-prime mortgage crisis sweeps across the United States. As a result, those millions of people will learn first hand what can happen to their credit score when a foreclosure is put on it.
When a foreclosure happens, it means that the homeowner can no longer make payments on their loan. The property is then seized and sold. The owner of the property receives no money for this sale, and all the money goes to paying off the mortgage for the bank, with whatever is left over going to the bank. This will all happen after about six months of missed payments and a Notice of Default to the homeowner. After three months more of not paying, the sale date for the foreclosure is set and the house is up for sale due to foreclosure.
Everybody knows just how bad a bankruptcy can be for your credit score, but what about if you suffer a foreclosure? First, a foreclosure will stay on your credit report for seven years, while a bankruptcy will be on it for as much as ten years. In regards to your FICO score, it will plummet about 100 to 200 points. This means that if you have great credit at 700, you will most likely fall to about 500. However, if you had perfect credit of 850, you will fall to average credit of 650. It may seem that you can still get credit if your score is at 650 and the foreclosure may not be that bad, but it is. When you apply for credit, credit holders will see the big evil word 'Foreclosure' on your credit report. That means for the next few years, there will be no way you will get credit as many lenders will fear you could default on your loan to them, as you did with your mortgage loan.
Foreclosure is a very difficult situation to be in, but thankfully it is not the end of the world. As many people know, credit is ever changing and it is not set in stone. Therefore, over the seven years that you have to deal with a foreclosure on your credit report, you will be able to slowly repair your credit. To do this, you need to make sure you pay back your bills and credit card payments as you get them. You should slowly try and apply for credit as you go through the years, and you should even go to debt counselling as it will look good on your credit report.
Do not fear that everything is over when you go through a foreclosure. Millions of people have gone through the same thing and millions more will go through it as well. All you can do is dig your feet in, work hard to get through it and learn from the mistake of foreclosure and ensure it never happens to you again. Repairing your credit is at an all time importance and something that you can do yourself. Everything is determined by your credit score, so be alert, be prepare and fix your credit today.
If you or anyone that you know would like more information regarding this post, feel free to visit http://www.creditrepairbydrjen.com or email drjen@creditrepairbydrjen.com
When a foreclosure happens, it means that the homeowner can no longer make payments on their loan. The property is then seized and sold. The owner of the property receives no money for this sale, and all the money goes to paying off the mortgage for the bank, with whatever is left over going to the bank. This will all happen after about six months of missed payments and a Notice of Default to the homeowner. After three months more of not paying, the sale date for the foreclosure is set and the house is up for sale due to foreclosure.
Everybody knows just how bad a bankruptcy can be for your credit score, but what about if you suffer a foreclosure? First, a foreclosure will stay on your credit report for seven years, while a bankruptcy will be on it for as much as ten years. In regards to your FICO score, it will plummet about 100 to 200 points. This means that if you have great credit at 700, you will most likely fall to about 500. However, if you had perfect credit of 850, you will fall to average credit of 650. It may seem that you can still get credit if your score is at 650 and the foreclosure may not be that bad, but it is. When you apply for credit, credit holders will see the big evil word 'Foreclosure' on your credit report. That means for the next few years, there will be no way you will get credit as many lenders will fear you could default on your loan to them, as you did with your mortgage loan.
Foreclosure is a very difficult situation to be in, but thankfully it is not the end of the world. As many people know, credit is ever changing and it is not set in stone. Therefore, over the seven years that you have to deal with a foreclosure on your credit report, you will be able to slowly repair your credit. To do this, you need to make sure you pay back your bills and credit card payments as you get them. You should slowly try and apply for credit as you go through the years, and you should even go to debt counselling as it will look good on your credit report.
Do not fear that everything is over when you go through a foreclosure. Millions of people have gone through the same thing and millions more will go through it as well. All you can do is dig your feet in, work hard to get through it and learn from the mistake of foreclosure and ensure it never happens to you again. Repairing your credit is at an all time importance and something that you can do yourself. Everything is determined by your credit score, so be alert, be prepare and fix your credit today.
If you or anyone that you know would like more information regarding this post, feel free to visit http://www.creditrepairbydrjen.com or email drjen@creditrepairbydrjen.com
Monday, November 3, 2008
Do you understand your FICO score?
Nothing has a bigger effect on whether or not you can get a loan, how much interest you pay and how credit will affect your life, than the FICO score. Fair Isaac Credit Organization (FICO) is the leading credit report company in the United States, and the number they assign your credit dictates your future.
The scores range between 300 and 850. The lower the number you have, the worse your credit is. If you have a score of 300, your credit is classified as completely abysmal. There is no way you can get any type of credit, and even if you somehow did, your interest rate would be so high you could never afford to pay it back. However, on the flip side if you have a credit score of 850, then you would have no problem at all getting credit. Your credit rating would allow you to have a lower interest rate, easier terms for your loan and you will have to put up much less collateral.
The reason that FICO is used so extensively is that it uses a system that takes into consideration much of your credit history so that companies can quickly and easily see where you lie compared with everyone else. If you have a score of 700, then you are just above average and companies will be more inclined to giving you credit. However, if you have a score of 500, then you are 150 points below the average and you will be unlikely to get the loan, or the loan terms that you had been hoping for.
Understanding how your FICO score is determined will give you a much better chance of repairing your credit. FICO places 30 percent of an emphasis on the amount of money you owe. This also takes into account your outstanding debt, including your mortgage, credit cards and auto loans. The length of your credit history has a 15 percent stake on your FICO report. The longer you have been using credit, the better the FICO score will be.
Ten percent of the value of your FICO score is put on the loans you have had and the mix of your credit. If you have had car loans, credit cards and mortgages, then your credit score will be better. Another ten percent of the score looks at whether or not you have sought credit in the past year. The more credit you try and get, the lower your score will be. Lastly, a full 35 percent of your credit score will be based on your payment history. This is why it is so important to pay your bills. If you don't pay your bills, then you will have a lower credit score.Your credit score has a huge affect on what kind of credit you can get. If your credit score is low, below 600, then your chances with the loan will be smaller. However, if the score is over 700, you will be able to get any loan you want.With that being said, it is so important to understand and recognize yor FICO score and keep working on improving it by making smart financial decisions with your credit.
If you or anyone that you know would like more information regarding this post, feel free to visit http://www.creditrepairbydrjen.com or email drjen@creditrepair.com
The scores range between 300 and 850. The lower the number you have, the worse your credit is. If you have a score of 300, your credit is classified as completely abysmal. There is no way you can get any type of credit, and even if you somehow did, your interest rate would be so high you could never afford to pay it back. However, on the flip side if you have a credit score of 850, then you would have no problem at all getting credit. Your credit rating would allow you to have a lower interest rate, easier terms for your loan and you will have to put up much less collateral.
The reason that FICO is used so extensively is that it uses a system that takes into consideration much of your credit history so that companies can quickly and easily see where you lie compared with everyone else. If you have a score of 700, then you are just above average and companies will be more inclined to giving you credit. However, if you have a score of 500, then you are 150 points below the average and you will be unlikely to get the loan, or the loan terms that you had been hoping for.
Understanding how your FICO score is determined will give you a much better chance of repairing your credit. FICO places 30 percent of an emphasis on the amount of money you owe. This also takes into account your outstanding debt, including your mortgage, credit cards and auto loans. The length of your credit history has a 15 percent stake on your FICO report. The longer you have been using credit, the better the FICO score will be.
Ten percent of the value of your FICO score is put on the loans you have had and the mix of your credit. If you have had car loans, credit cards and mortgages, then your credit score will be better. Another ten percent of the score looks at whether or not you have sought credit in the past year. The more credit you try and get, the lower your score will be. Lastly, a full 35 percent of your credit score will be based on your payment history. This is why it is so important to pay your bills. If you don't pay your bills, then you will have a lower credit score.Your credit score has a huge affect on what kind of credit you can get. If your credit score is low, below 600, then your chances with the loan will be smaller. However, if the score is over 700, you will be able to get any loan you want.With that being said, it is so important to understand and recognize yor FICO score and keep working on improving it by making smart financial decisions with your credit.
If you or anyone that you know would like more information regarding this post, feel free to visit http://www.creditrepairbydrjen.com or email drjen@creditrepair.com
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