What is a credit score?
A credit score is a number given to you based on the repayment history of your credit facilities, such as credit cards, lines of credit and auto loans. It represents a judgements of the risk you pose to money lenders at a specific point in time - the higher the score the less risk you pose. Credit reporting agencies such as Equifax and Transunion use a scale between 300-900 to indicate credit worthiness. For more information, please visit this link: https://www.equifax.com/personal/education/credit/score/
Why do we (and Lenders) need it?
The credit score permits lenders to have a standardized way of judging how likely a person is to pay back their debt in a timely manner.
The Homewise Credit Score advantage
We only need to pull a borrower's credit score once and can provide it to multiple lenders on their behalf. If a borrower was to meet with multiple lenders on their own, each lender would need to pull the borrower's credit score separately. This can have adverse effects on their score as pulling credit multiple times can be looked at as a red flag and lower a borrower's score.
What does it mean for your mortgage?
Your score is one factor which the lender uses in order to evaluate the strength of a mortgage application. Along with income qualification standards, credit score will determine whether or not you will be approved for the mortgage and at which rate class. For instance, many lenders have both ‘A’ and ‘B’ sides for people above or below a credit score of 600-650. Note, that your credit score can also impact your monthly premium for Home Insurance. A higher credit score may decrease monthly fees. Find out more about Home Insurance from our partner Sonnet.
How does it get pulled?
As part of our application process, you will authorize us to access your credit information so that we can then use it to begin the conversation with our lenders. The best part is we are able to give you free advice based on your situation, in case you have any specific or even general questions about your score.
What is a good credit score?
There is no standard of a good score, as every lender is different. However, a score of 650 and above is generally universally accepted and preferred by all lenders.