When a refinance company puts out a mortgage product, they set qualification requirements. One of the main measures of qualification is an applicant’s credit score. Usually a lower number is set by the company to accept any application. Say this numbers is 700. A homeowner with credit score of 699 will not be able to qualify for refinance home mortgage loan for this product. Same homeowner may qualify for other refinance products, but the rate offer will be higher. Usually the better the rate higher the credit score needs to be.
So, a homeowner with low credit score will pay for it many years to come in the form of higher interest rate. That is why it is essential that homeowners considering refinancing in the near future get their credit report and score and go through it. They may be able to increase their score. According to industry reports one in every three credit report has errors in it. Prospective loan applicant’s can get it corrected by contacting the agency and improve their score. There are other ways of lowering the score as will. Reducing the credit card debt ratio will increase person’s score.
It is important that they get their score from each of the big three credit agencies. These are Experian, Equifax and TransUnion. Each of them collects their information from different sources. That results in a different credit score for individuals. This information is important, because lenders use the lower of the scores. For example the applicant has a score of 720 from agency A and 690 from agency B, the lender will take his score to be 690. If the lender uses scores from all three agencies, then they will use the middle score. So all three scores are important and anyone thinking about applying for a refinance home mortgage loan needs to get all three of them. They may be able to get their scores from all three agencies for free from limited number of companies.
Homeowners should not wait until the lender finds their scores to be low and reject their application. Refinance mortgage rejection will further reduce their credit score and all that time will be wasted. There may be non-refundable fees as well. They should first get their credit score from 3 bureaus and get online to get a few mortgage rate offers for their circumstances. The quote systems are great tools to find out easily and quickly what rates individual may be able to qualify.