If you don't know you're Credit Score, or have borderline credit, read this before you go looking for a loan.

The credit score most lenders use to determine whether or not to give you a mortgage, and what rate and terms they'll offer you if ou do qualify, is a composite of three scores from three different credit reporting agencies. Many things contribute to how each agency scores your credit in their system. Almost everyone knows that "bad" credit, like collections on overdue accounts, or repossessions and foreclosures, will lower your score. And, of course, paying your accounts on time and having paid off accounts help raise it. Some other things are less obvious, and can effect your score in different ways. For instance, the number of open accounts, and your current balance compared to your allowed high balance on credit cards can be good or bad, depending on how each system views them. What most people don't know, and what we'll talk about here, is how having several banks or credit unions pull your credit, (and maybe turn you down for a loan) can really lower your credit score!

Each time a lender pulls your credit, whether they offer you a loan or not, it can lower your credit score at all three agencies by several points. What this means to you, if you don't know your credit scores, is that you could "shop" yourself into a worse rate or even a turndown, especially if you started out just a few points above a lenders cut off for approval. If you shop around to 6 or 8 or 10 different lenders over a 10 day period, and then decide to take the first or second program you were offered, you may find that you no longer qualify for it!
Or, if you do still qualify, the rate they offer you has gone up, as your score has gone down.

If you've applied for a loan, and been turned down, one thing you definitely should not do is immediately go to another lender (or 4) and apply there too! Stop, and read your actual turn down letter. There should be information in it telling you why you were turned down, and where to call or write to get a free copy of your credit report. Before you apply anywhere else, get a copy of that report. All banks and credit unions have only slightly different criteria for issuing loans. If the first bank turned you down, probably any other will, especially since your credit score has likely dropped several points when the first bank pulled your credit.

Credit repair is beyond the scope (and not the focus of) this post, but briefly you should take your credit report and do the following;

1. Check for mistakes. Accounts that aren't yours, or collections that you have paid off still showing due. Notify all three credit burueas and the company listing the error in writing, and ask that it be fixed.
2. Find out what your score is. Usually its between 450 and 800. If its below the 620-640 range, most banks or credit unions won't approve you for a mortgage.
3. Take care of any valid collection accounts listed on your report, (especially small ones that you can pay off easily) and asked to be informed in writing when they have upgraded your account to "paid off" with the credit burueas. Check back with them every 30 days until they do.
4. If you have credit card accounts with balances that are close to your limit (for example a $9400 balance on a card with a $10,000 limit) and other cards that are paid off, use balance transfers to move some of that debt to another card. Try to get your ratio below 65%. BUT, only do this if you can get a rate the same or lower than where you have the balance now, and only if they waive the balance transfer fee (or its low), and it won't take your balance on the new card above 60-65% of your limit. It "feels good" to pay off a credit card, but having 4 cards with balances at 50-60% of their limit is much better for your score than having 2 cards at 95% of their limit.

All of these steps should improve your scores in the future, but you need a loan now. You could start shopping finance companies for your mortgage, but their rates are normally quite high, AND each one will pull your credit,, which will again keep lowering your score. So how do you shop for the best rates and terms for your situation, without having your credit pulled a dozen times for a dozen different lenders?

Find a fully licensed Mortgage Broker that deals with a nationwide network of lenders, and let them work to find you the best program for your credit and situation, all with just ONE credit report.

You save time and effort, and your credit stays stable, so the offer they make you will still be valid when its time to close. Yes, a Mortgage Broker will charge you a fee, but thats actually to your advantage, as we explained in a previous post. You pay them, and they work for you, to find you the best possible deal on your mortgage. If you live in Florida and need a mortgage broker, click here to contact one that will make finding your mortgage easy, and will work with you to find the best possible program to meet your needs.

FMI