No one can predict the future. Credit scores are the universally accepted way to best determine how someone will handle their financial commitments. Your personal credit score is a major component in the loan approval process but can sometimes seem like a mystery. Understanding what affects your credit score will enable you to maximize your score prior to applying for a loan and ultimately get the best rate for your mortgage.
A good credit score typically falls between 700 and 850.The three major credit bureaus – Equifax, Experian, and TransUnion – use a statistical program that takes into account your active/open credit accounts, any closed and/or delinquent accounts, the portion of your credit limit used on each account and past payment history to calculate the risk of extending you more credit. This risk is quantified as your credit score.
However, you don’t have to have a score this high to qualify for a loan, BankSouth Mortgage offers several loan programs that have less stringent credit requirements. Contact a BankSouth Mortgage expert to discuss your eligibility, or continue on to learn about improving your credit score.
No two credit scoring systems are alike. However, each system does take some common items into account when determining your credit score. According to the Federal Trade Commission (FTC), these are the most common actions you can take to establish good credit and to raise your score.
While it may seem overwhelming to establish good credit or to improve your credit, it is possible. Contact a BankSouth Mortgage expert for an in-depth analysis of your credit report and detailed professional direction.
According to the Fair Credit Reporting Act (FCRA), both the credit reporting company and the information provider (the person, company, or organization that provides information about you to a credit reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider.
Detailed steps on how to contact a credit reporting company to dispute an item on your credit report can be found on the FTC’s web site.
According to the FTC:
When negative information in your report is accurate, only the passage of time can assure its removal. A credit reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.