Editorial

Front Page - Friday, July 2, 2010

Real Estate Facts

Lower rates with a higher score

Elwynn Schwartz

Lenders are an increasingly difficult crowd to please, so if you’re looking for the best deal on a mortgage, you need a couple of strategies to improve your credit score. Lenders use that number to determine your risk of default, and it may be the single most important factor in your application.
Scores range anywhere from a very risky 300 to a perfect 850. You’ll need a 750 today to get terms a 700 would have gotten you two years ago. Begin with a $16 investment at myfico.com, where your three reports from Experian, Equifax and TransUnion are averaged into one representative score.
A Zogby poll reports that one third of all people who request a credit report find errors. Your score is only as accurate as your information, so scour your report and correct errors immediately. This could boost your score by as much as 200 points!
The largest percentage of your score is determined by your payment histories, but the second largest factor is your “card utilization rate,” or your total balances compared to your total credit limits. 10% is the ideal number (like $2,500 in charges when you have a $25,000 line of credit).
If you correct errors, have an excellent payment history, and get your debt-to-credit ratio down, you can expect to save thousands with a lower interest rate on your mortgage.
Elwynn Schwartz is the owner of Chattanooga Real Estate Consultants and may be reached at 423-894-3050.

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