A borrowers record of various personal debt ie: credit cards, consumer debt, etc. and whether payments were made on time. Mortgage lenders will review the borrowers credit history to help determine their loan qualifications and the terms of the loan.With recent changes to the laws concerning your credit report, you can now obtain a free annual credit report from each of the three major credit reporting bureaus. By using this free credit report to protect your good credit rating, you can ensure that you qualify for the best loan rates available.
Although identity theft is getting a lot of attention, credit reports are more likely to have inaccuracies that can cause problems. For example, an account may be reported as "paid", but still show a balance due. Also, some small creditors are really good at reporting late payments, but not so good at reporting paid off accounts. Occassionally, a creditor will give an account to a collection company, and both will continue to report delinquencies, although only one is legally entitled to.
Correcting inaccuracies in your credit report is as important as looking for evidence of identity theft.
Having a good credit history means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments.
As negative items in your credit history get older your credit will improve and your credit scores should increase. Your credit history plays the biggest role in determining your credit score and should not be taken lightly. Your credit payment history accounts for 30-40% of your entire credit score.
If you have a dispute in your credit history notify the consumer credit agencies. If the inaccuracy cannot be verified or is inaccurate, they are required to remove the information.
Your credit history plays an important part in determining the level of risk associated with lending you money. Borrowers whose credit history show timely payments and responsible use of credit are considered low risk. These borrowers receive the best rates and have more loan options available to them.
Your credit paying history is not the only factor that counts towards evaluating your credit worthiness. There are many factors that contribute to your credit ranking, including: debt service ratio's, length of credit, new credit, credit inquires to just name a few.
Your credit history or lack there of will determine your credit score. If you have credit cards that are at there limits or multiple late payments on your credit report will lower your credit score and increase your interest rate when applying for a mortgage loan.
Before applying for a mortgage loan, it's a good idea to order your own credit report to see if their are any errors that need to be disputed. Innacuracies on your report can drop your score significantly. You will pay for a lower credit score with a higher interest rate, which may cost you thousands of dollars in higher monthly mortgage payments over the life of the loan.
