Buying a Home? Understanding The Mystery That Is Credit


Getting approved for a home loan can be stressful and there are many different variables that are going to go into whether you are approved. One of the biggest factors that a bank looks at is your credit score. There is a lot about credit scores that is misunderstood. In fact, there are a lot of different things that you will hear about credit that may just be fabricated. Since your credit is going to be a vital part of becoming qualified for a home loan, this article is going to discuss some of the most important aspects of your credit score. 

How Credit Is Calculated

Calculating a credit score is a complex algorithm that takes into account 5 different variables. These variables are: payment history, credit utilization, length of credit history, new credit, and credit mix. The different variables account for a different percentages of your score with a breakdown of 35% payment history, 30% credit utilization, 15% length of credit history, with 10% of total credit being calculated from both credit history and new credit respectively. While each is a vital part of your credit score, payment history is the most important. The credit bureau and lenders will look at your past record of paying your different bills, and if you demonstrate responsibility with these bills then you are going to help your credit score. Credit utilization is also a very big portion of your credit score. Credit utilization is simply the percentage of available credit that has been borrowed. For instance, if you have a $1,000 credit card and you have utilized all $1,000 then you are at 100% utilization. It is recommended that you stay below 20% credit utilization, but staying at 6-7 percent is the best place to be for building positive credit utilization. 

Can You Fix Credit

There are many different ways that you can help your credit improve. You can be sure to pay your bills on time, keep your credit utilization low, continue to use your credit, and maintain a good mix of both installment and revolving credit accounts. However, there are times when it is possible to do more for your credit score. It is possible that there are mistakes on your credit report, and you have the right to a completely accurate report. There are credit repair companies that focus on helping you remove any inaccurate and damaging information from your report. Each time something damaging is removed your score can recalculate. Do not let poor credit stop you from getting into a home.

Use these tips and check the home loan rates in your area today.


30 May 2017

Know Your Options when Financing a New Business

When I began my first business selling sports equipment locally, I knew the sports-world well, and I knew how to run a business. One thing I did not know a lot about was the financial world. I had never applied for a loan in my life other than when I financed my car with the dealership in-house financing. My first application at a large bank was denied. I began looking into my other options, and I found that there were more lenders for new businesses than I realized. I applied at local credit unions, local banks, and other business lending services. I was able to secure more funding than I even expected, and my credit is just average. I created this blog to help other new business owners realize that there is funding out there. You just have to find it and apply! Don't give up on your dream.