Why_Credit_Scores_Are_So_Important_for_Mortgage_Refinancing by zhucezhao

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									Why Credit Scores Are So Important for Mortgage Refinancing

Word Count:
388

Summary:
A credit score is a rating that is also called a fico score. This rating
yields a number that reflects your level risk to the creditors. The
higher the score the better your credit rating. The lower your score,
the bigger risk of credit you are considered. The score is generated
using statistical model, that considers credit accounts from your credit
report. Credit scores will determine the loan amount, interest rate,
morgage terms, and in some cases the amount closing costs charged.


Keywords:
Credit Scores,Mortgage Refinancing,home loans,home equity loans,mortgage
rates


Article Body:
What is a Credit Score and why is it important for a mortgage loan?

A credit score is a rating that is also called a fico score. This rating
yields a number that reflects your level risk to the creditors. The
higher the score the better your credit rating. The lower your score,
the bigger risk of credit you are considered. The score is generated
using statistical model, that considers credit accounts from your credit
report. Credit scores will determine the loan amount, interest rate,
morgage terms, and in some cases the amount closing costs charged.

Your credit score is not archived or stored as part of your credit
history in your credit file. The score is generated at the time a lender
requests your credit report, and is then included with the report viewed
by the creditors. Your credit score is a specific number, and it changes
as the elements in your credit report change. For example, payment
updates or a new account could cause your score to fluctuate. There are
many different credit scores used in the financial service industry. Your
score may be different from mortgage lender to mortgage broker, depending
on the type of credit scoring model that was used.

Who uses credit scores and how are they used?

Banks, credit card companies, auto financers, retail stores and most
other home equity lenders that issue credit or mortgage loans use credit
scores to quickly summarize a consumer's credit history, saving the need
to manually review an applicant's credit report and provide a more
reliable, faster risk decision. Although many additional factors are used
in determining risk, such as an applicant's income vs. the size of the
loan, a credit score is a leading indicator of one's basic
creditworthiness.

What information impacts my credit score?
The information that impacts a credit score varies depending on the score
being used. Usually, credit scores are affected by payment patterns in
your credit report. (ie. late payments, credit type, number of accounts
and age of accounts) Other considerations are the total amount of
revolving debt and recent inquiries. Remember that credit bureau scores
cannot use demographics prohibited under the Equal Credit Opportunity
Act, such as race, color, religion, national origin, gender, age, marital
status, receipt of public assistance, or exercise of rights under the
Consumer Credit Protection Act.

								
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