Before applying for a loan, it is wise to not only research the item you wish to buy, but research yourself: what is your credit score and how will that affect your loan rate?
Your FICO score is the number that lenders use to estimate the risk of lending you money for a purchase or issuing a credit card. Your score can affect the amount they are willing to lend and the rate you will receive.
If you are in the market for a car or a home and your score isn’t quite up to par, there are steps you can take to help raise your score before applying for your loan—if you do the research on yourself first.
FICO scores range from300-850, with the higher numbers being considered better. The score is determined by your payment history, the number of accounts you have, the longevity, or lack of, credit history, new credit and the types of credit used. For more detailed information on how MyFICO keeps score, click here.
So just where will your score land you? According to myfico.com, the average credit score in Nevada is 665.
Let’s take a look at what rates you would get if applying for a home loan with a score of 665:
Raising your score to the next tier will save you $21 a month (based on a loan estimate of $180,000) on your payment, for an annual total of $462 or $13,860 over the life of your 30-year loan.
On this screen shot, the breakdown shows how much your score could end up costing or saving you over the life of the loan.
If you aren’t in a hurry to buy, it can save you in the long run to wait a few months and boost up your score.
Mistakes on your credit report do happen, but they can be fixed. You are entitled to one free credit report from each of the three reporting agencies (Equifax, Experian and TransUnion) every 12 months. You can visit AnnualCreditReport.com to obtain your report and go to MyFICO for help to fix any errors.
Once you are ready, head on over to OneNevada to apply for your loan, applications can be completed online.