Credit Scores and Your Mortgage

Most people don't understand what a credit score can and cannot do for them. The truth is that a bad credit score can be costly when financing a home. Credit scores measure the risk to the creditor, not their credit knowledge amount or attitude. Typically borrowers with scores above 760 are charged the lowest rates, and those between 700 and 760 are charged a little more. Anything below 700 rates goes up significantly.

Even though you make minimum payments on your account, minimum payments could actually lower your score even when the payments are made on time. Here are a few facts:

• You cannot improve your credit by marrying someone with better credit than your own. Scores reflect your own past credit history, no one else's.
• Personal characteristics don't effect your credit. The most effective step your can take to improve your score is to consistently make timely payments. If you have been late in the past, get current and stay current.
• Don't max out your credit cards It is better to pay off debt than to move it around from one card to another. But it is better yet to pay your cards down to 30% of the available credit and keep them below that level.