Understanding Your Credit Rating

Before you think about buying Sarasota FL real estate

    The single most important factor in obtaining a good interest rate on a home mortgage is your "credit history." We'll try here to help you understand your credit rating and the mortgage terms you can expect from a Sarasota lender based upon your credit rating or "credit score". You need to know what your credit rating is before thinking of buying Sarasota FL real estate

    When you apply for a mortgage from a Sarasota lender or broker, the most important factor is your credit. Your ability to get a home mortgage is determined almost entirely by your credit. There are other factors but your credit rating is the single most critical factor that determines whether you'll get a mortgage loan at all and at what interest rate you will pay to buy a piece of Sarasota real estate property. The better your credit rating, the lower your mortgage interest rate will be.

Before You Start Looking for a Home

    Before you start looking for a home, take the time to order your credit report from all 3 major credit reporting agencies. The three major credit reporting agencies are:

A General Guide to Credit Ratings

    Your "credit rating score" is expressed as a "FICO (Fair Isaac Credit Organization) Score", a standardized way of expressing credit worthiness. It's a measure of the risk a lender takes in providing you a home loan.

    To develop their specific credit scoring model, each mortgage provider selects a random sample of its past and current customers and analyzes it statistically to identify those characteristics that relate to creditworthiness. Each factor is assigned a weight based on how strong a predictor it is of who will likely be a good credit risk. Creditors may use their own credit scoring model, different scoring models for different types of credit, or a generic model.

    Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like race, sex, marital status, national origin, or religion as factors. However, Sarasota home mortgage providers, like all creditors are allowed to use age in a properly designed scoring system. But any scoring system that includes age must give equal treatment to elderly applicants.

    Factors that can damage your FICO credit score include late payments, absence of credit references, and unfavorable credit card use.

    According to many experts, your FICO credit score is made up of five major components:

    Here's the bottom line. If you want to buy Sarasota real estate, start now thinking about everything you do and every bill you pay or let slide, in terms of its effect on your credit rating.Do this religiously and you'll be fine.