Home Buying Terminology - Credit Score

An A-to-Z review of common terms you'll encounter during the home buying process.

Credit Score -- In previous posts, we talked about credit reports and credit bureaus. Now we round out this particular discussion by defining what exactly a credit score is.

Your credit score is a computer-generated score used by a lender when determining whether or not to loan you money. Basically, the lender compares your score to their own internal set of guidelines.

If your credit score is favorable, you'll probably get the loan. If your score is bad, you may not get the loan (or might have to pay a higher interest rate to get it).

Let's Recap:
So your credit history leads to your credit report, which banks can obtain from the big three credit bureaus (Experian, Equifax and TransUnion). The bank would then use a software program to generate a credit score based on your credit report. This is the all-important number that determines whether or not they loan you money, and at what interest rate.

Make sense?

Recommended Reading
I found a great article on the credit scoring process over at HowStuffWorks.com:
http://money.howstuffworks.com/credit-score.htm

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Learn more home buying terms at HomeBuyingInstitute.com
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Home Buying Terminology - Credit Reports

An A-to-Z review of common terms you'll encounter during the home buying process.

Credit Reports -- A credit report is like a report card that grades you on past credit usage. Actually, you have three credit reports, one from each of the credit bureaus mentioned in the last post.

Your credit report leads to your credit score. Mortgage lenders base their lending decisions (whether or not to loan you money) mostly on your credit score.

Obtaining copies of your credit report should be one of the first steps in your home buying process. That way, if you find any mistakes on your report, you can work to get them cleared up before filling out your mortgage application.

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Learn more home buying terms at HomeBuyingInstitute.com
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