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Learn About Credit & Income:
Credit Basics| Errors
in Your Credit Report? | Understanding Your Credit
| Repair Your Credit | Looking
at Your Income
Understanding Your Credit
A credit score is a computer-generated number
that indicates your ability and willingness to repay a debt based
on your credit record. The score enables lenders to determine
loan approvals as these scores are recognized by computer software
to determine loan approvals in a very short time. Credit is only
one part of the mortgage information that will decide if your
application is approved.
The largest loan most people make (a mortgage loan) requires some
planning. Do not increase your debts by increasing your credit
card limits or by applying for a number of credit cards. Even
if you do not use them, new credit purchasing power will not help
you buy a home. In fact, adding additional credit could jeopardize
future credit and any pending mortgage applications.
If you show a pattern of managing your credit wisely, keeping
credit card balances low and consistently paying your bills on
time, your credit score will be positively affected.
The most commonly used credit score today is known as the FICO
score. Developed by Fair, Isaac and Company, FICO scores are ranked
on a scale of approximately 400 to 850 points. Statistically,
higher credit scored consumers are more likely to repay their
debts than consumers with lower credit scores.
Credit scores do not last for ever. If your score is low, keep
in mind that it is a snapshot based on current information in
your credit report. There are things you can do today to improve
your credit score in the future.
Next: Repair Your Credit
Credit Basics| Errors
in Your Credit Report? | Understanding Your Credit
| Repair Your Credit | Looking
at Your Income |
