A Crash Course On Credit Scores
By Brian Daniel, Thu Dec 8th
You sit down to look at your credit report for the first time.If you're scores are above 720, congratulations! You haveexcellent credit; stop worrying. If you're scores are not above700, no problem--let's get to work. Take solace in the fact thatthe national average score is around 676 according to the GallupOrganization. If you're scores are below 400, 500, or 600,there's definitely room for improvement and only one way togo--up!
If the numbers I've mentioned don't make any sense to you or youhave no idea what they mean, don't fret--I'll explain. Creditscores range from 350 to 850. All three of the creditbureaus--Equifax, Experian, and Transunion--offer FICO creditscores using a complex mathematical formula developed by Fair,Isaac and Company, but they each give the scores a differentname: At Equifax, the FICO is known as the Beacon credit score;at TransUnion, it's called Empirica; and at Experian, it'scalled the Experian/Fair, Isaac Risk Model.
If you're credit scores are above 720 you have excellent creditand will able to get the best interest rates available. As yourcredit scores drop, the interest rate you'll receive for a homeloan will rise: this is known as tiered pricing. The more of arisk the lender takes on you, the higher your interest rate willbe. In addition, all lenders have their own break points betweentiers. What this means is that one lender may raise the interestrate if a score drops below 700, while another lender won't givea higher rate until the score drops below 690. In summation, youshould do everything in your power to maintain good creditscores, and be sure to shop around and do your homework whenlooking for a home loan because all lenders are not createdequal. I think you've already gleaned the moral of the articlebut just in case you haven't, here it is: Good credit scoressave lots and lots of money, and be sure to choose a lenderwisely to get the best rate for your scores.
About the author:Brian Daniel is a loan officer/marketing coordinator for Bend Mortgage GroupLtd. a provider of home loans and mortgages for the state ofOregon. For more useful tips and articles, visit www.bendmortgagegroup.com
