Credit Score Checkup Can Make a Big Difference

Lenders will check your credit score before finalizing your loan application. Is your score the best it can be?
By: Lew Sichelman: REALTOR® Magazine Online
It’s most lenders’ standard practice to run a credit score check immediately before a borrower closes on a mortgage.

Borrowers who have taken on more debt, failed to pay bills or done anything else that change their credit score for the worse since applying may find themselves facing not only a higher rate, but also being asked to come up with a larger down payment.

Borrowers whose credit scores are on the edge should ask their lenders about two computer programs that can help.

ScoreWizard is a powerful simulator that allows would-be borrowers to scan credit files for opportunities to raise scores. Another possibility is ScoreRight, which uses common assumptions to pose ways to increase a score. Both are only available through loan officers or mortgage brokers.

These credit-advisory programs can prove valuable to anyone searching for the best rate possible. The difference between a 720 score and 580 could be as much as 3 points, according to the booklet "Your Credit Score." It was prepared by the Consumer Federation of America and Fair Isaac, the company that developed the scoring programs used by each of the three major credit repositories-Equifax, TransUnion and Experian.

On a $200,000, 30-year loan, the difference between 6.5 percent and 9.5 percent is $418 per month, $5,016 a year and $150,480 over the loan's 30-year life.