For the average individual, a family home is probably the biggest purchase he/she will make in a lifetime. In fact, the purchase price is so big that more than 90% of home buyers do so via home loans with a mortgage clause. This means installment payments over a span of 10 to 30 years. This also means interest payments over and above the principal debt. This article will discuss the importance of credit repair in homes for sale in Long Island NY.
What is a Credit Bureau?
A credit bureau is a private for-profit entity. It collects credit related information on an individual, collates the same information, and sells it to third parties. There are dozens of credit bureaus in the United States alone, but the top three are Experian, Equifax, and TransUnion.
What is a Credit Report?
This is a few sheets of paper containing basic personal information and credit related transactions (e.g. payment history, credit inquiries, amount of debt, types of debt, court judgments). The more default and the bigger the debt, the lower your score.
What is a Credit Score?
This is your grade so to speak. The higher your score, the less of a risk you are at defaulting on a loan. The lower your score, the bigger the risk of your defaulting on a loan.
Risk and Interest Rates
A bank or lender can use the fact that you have a higher risk in order to disapprove your loan application or require a higher interest rate. The most accepted form of risk determining score is known as the FICO score. The average FICO score needed when looking for homes for sale in Long Island NY is around 750 to 780 FICO. If you have a score lower than this, then you can expect to get higher interest rates. If you have a score below 700, then chances are your home loan application will be rejected by reasonable lenders.
Check Your Reports and Scores
You can get free annual credit reports. These are from Experian, Equifax, and TransUnion. However, you need to buy the at least one credit score. If your score is below 750 by a few points (i.e. 745), then you can probably fix it within 3 to 6 months. If it is below 20 to 50 points, then you need at least a year. Anything lower will need a couple of years to fix.
Check Your Reports
You should look for information that is absolutely false, partially true, and obsolete. In the first case, this may refer to an item you did not purchase, and therefore did not pay for. In the second case, this may refer to a debt that is reported by your creditor but the amount is higher than your actual debt. In the third case, this may refer to a bankruptcy filing that was discharged 15 years ago.
Any information that is false, inaccurate, or obsolete must be disputed. By doing so, the negative information and point deductions are removed. This results in a higher credit score.
Tip: Check out your reports annually. Get the free reports. This way you have the maximum score as soon as you need it. This is much more advisable to panicking and cramming to increase your score while shopping around for homes for sale in Long Island NY.
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