4 Credit Score Tips from Our Mortgage Team

Your credit score can affect your monthly mortgage payments and even your ability to qualify for a loan. So it only makes sense that our members often have questions about their credit score. To help you, our mortgage team shares answers to a few common questions on credit scores in this post.

Q: I’m applying for a mortgage loan, but I don’t have any credit. What should I do?

A: You need to have some form of credit in order to purchase a home. Building credit is different for every member, but one recommendation we often give is to get a secured credit card at Elevations. This is a great way to start building credit with a cash deposit you make that functions as a credit line.

Q: Can a small change in my credit score, from three to five points, make a large difference in my mortgage rate?

A: It depends on whether you’re close enough to tip into a higher or lower credit score bucket. Take a look at the ranges below (or check out this handy infographic) and determine whether this might affect you:

Exceptional Credit: 800+

Very Good Credit: 740-799

Good Credit: 670-739

Fair Credit: 580-669

Poor Credit: below 579

If you tip over into a higher credit score bucket, your mortgage rate is going to be better. Generally, with a higher credit score, the lender has lower risk so you’ll get a lower rate on your mortgage loan.

Q: I’m hesitant about my credit because I know there’s been some kind of collection on a bill I didn’t pay. What should I do?

A: This is a frequent question we get, as members ask about a phone bill or medical bill they didn’t know about or didn’t pay that has gone to collections. Instead of paying it, they often just let it sit there as if it’s going to go away. However, the sooner you get the payment taken care of, the sooner your credit will be recaptured, even if you set up payments to get it paid off.

Credit can be forgiving if you take the time to monitor it, correct your issues and then allow time for your credit to be rebuilt. After you’ve been paying debts on time or paying debts off, you can see a drastic credit score change upward within six months to one year.

Q: Why is the credit score I got online different from the one your team pulled during my mortgage loan application process?

A: There are three different credit bureaus (Experian, Equifax and TransUnion), and your score can be different on each one. Plus credit scores from third-party websites, like Credit Karma, aren’t based on a FICO algorithm, so they’re often unrealistic compared to the score we pull.

Credit can be different from lender to lender depending on how they pull credit. For instance, when you get a HELOC at Elevations, we pull credit from a certain version of Experian. Other lenders might choose to pull it in a different version of Experian.

Be aware that your credit score may be higher or lower than you expect when you apply for a loan. As a personal example, I wasn’t going to apply for a car loan because I thought my credit score wasn’t that high through research and credit monitoring I’d done on my own. But I went ahead and applied, and I found that my credit score was actually much higher than I expected.

Have a question about how your credit score will affect your mortgage? Our loan officers are credit score experts—they can evaluate your credit score and provide coaching to improve it. Contact us to find out how.

Author Elizabeth Million

Boulder local Elizabeth Million shares advice on home buying and mortgages picked up from the diverse roles she’s served in the real estate industry, including appraisal business owner and mortgage loan officer for Fortune 500 companies. In her current role as VP of Mortgage Lending, Liz has led Elevations to the title of largest credit union mortgage lender in Colorado.

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