Credit Scores

Your credit score is an integral part of loan application. It not only determines whether or not you can be approved, it also can make a difference on the interest rate of your loan.

For mortgage application purposes, we require a “tri-merge” credit report. It means we are receiving information from all three major credit repositories: Equifax, Trans Union, and Experian.

Your trigger score is the middle score of the three. For conventional loans like the ones we offer, the minimum score required is 740, any score lower than 740 may negatively impact your interest rate. The amount of the adjustment depends on other factors. The most important of which is the loan amount and property value ratio.

An example is if you are refinancing between 75% and 80% of your property value and your middle score is between 700 and 739, you may be subject to additional charge of 0.75% of your loan amount as an adjustment. Lower credit scores and different loan to value ratios trigger different adjustments. The guidelines are clear, one point short of stated criteria will cause the adjustment, and it is not negotiable.

So one of the things you can do is to review the credit reports for any mistakes or discrepancies. We can help you to correct mistakes and update outstanding balances to bring your score up. You will want to do this if it will help get a better rate. It takes some time and does cost up to $90 per trade-line to correct all three repositories.

I have seen dramatic increases in credit score when an account with late payment history is corrected with clear and indisputable documentation. Sometimes you can also bring your score up by reducing the balance of your credit card accounts. The process takes anywhere from a few days to a few months depending on the complexity of the disputed account.

There is vast information about credit reports and credit scores. A Google search will probably more than satisfy your curiosity. Otherwise, making your payments on time is probably the best way to protect or improve your credit score.