Getting A Mortgage Demands A Good Credit Score

By Gloria C Cook

Right now the real estate and mortgage market is unpredictable. Even if you have perfect credit it may seem difficult to refinance your current mortgage or acquire a new mortgage loan if only due to the falling housing market. Lenders these days are being much more cautious about their lending standards and the amount of credit risk that they are willing to undertake.

Lenders have certain guidelines that they follow in order to figure out to whom and how much money they will lend. These guidelines come from the secondary market, for example Fannie Mae and Freddie Mac but the majority of lenders also have their own in house standards. While it is possible that your credit rating is high enough to meet the regular standards for a conventional or government loan, you may still be unable to qualify because your lender may have a stricter standard.

In order to qualify the lender will look at your credit score, your income, your debt to income ratios and your overall ability to repay the mortgage. Before the housing market crash and subprime meltdown, no documentation nor proof of income loans were common, however, lately the banks have increased their standards and these kinds of loans are probably a subject put to rest. A significant down payment can often help you to qualify though because the loan to value ratio of your loan becomes more attractive.

If you discover that your credit score is to low to qualify with a specific lender you should discover what is necessary for you to qualify. If your score is close, the answer may be as simple as shopping for a different lender. You do need to realize, however, that every mortgage lender that you contact could possibly run a credit report and every single inquiry on your credit report will further lower your score.

A better solution is always to shop around for a mortgage by calling and asking specifically about their underwriting standards. They can tell you what credit score you need. You can find out what your own score is by obtaining a free copy of all of your credit reports and paying the additional $15.00 fee to obtain a credit score.

If your credit rating is low but still in the range you could attempt a rapid rescore. In this case, when there is something that is inaccurate that is showing on your report and you've got actual documentation, you can contact the credit bureaus and request a rapid rescore. The same can be done if you pay down or pay off your balances. If you'd like a rapid rescore you need to ensure that the creditors update the information on your report and there's a possibility that you'll see an increase in your credit score.

Prior to applying for your new mortgage or refinance you have to be aware of your lenders requirements for your credit rating. Knowing the thing you need you can always take the steps to improve your status by paying down your balances or paying off some debts. You may also need to acquire additional credit so that you can increase your debt to available credit ratio, which always increases your credit score.

It can also be helpful that you should contact a established credit repair service company that has experience in helping people boost their credit scores rapidly but in a positive and completely legal manner. Learning about mortgages and home financing before you apply and doing whatever you can to raise your credit score can help you greatly in this continuously changing and unpredictable real estate market.

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