Whether you are purchasing a new home, renting an apartment, applying for a credit card, or hooking up a phone, your credit rating is checked.
When you borrow money, your lender sends information to a credit bureau which details, in the form of a credit report, how well you handled your debt.
From the information in the credit report, the bureau determines a credit score based on 5 major factors. Although all these factors are included in credit score breakdown, they are not given equal weighting. Here is the breakdown:
1) Previous credit performance 35%,
2) Current level of indebtedness 30%,
3) Time credit has been in use 15%,
4) Types of credit available 15%,
5) Pursuit of new credit 5%.
The bottom line, while your credit score is extremely important in getting a loan, it also determines your interest rate. According to financial theory, increased credit risk means that a risk premium must be added to the price at which money is borrowed. However, you don't need to obsess over the scoring guidelines to have the kind of score that lenders want to see. If you manage your credit responsibliy, your score will shine.
Buying your first home, or renting your first apartment can be an exhilarating experience, provided you do some research, stay within a comfortable budget and work with reputable professionals who will guide you through the process.
If you are reading this blog then you have taken the first step in contacting a reputable professional. For further information on how to get your credit score or how to get pre-qualified contact me, Roseann Flavin, at 617-448-2674 or e-mail me at
roed1@verizon.net.
I will be very happy to guide you through the process.
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Home Ownership and your credit score , Real Estate , Quincy , South Shore
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