Experian Online Credit Report: One Open Mortgage Can Give You Higher Score |
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The effects of mortgages on a consumer's credit score> have been the subject of a nationwide study conducted by Experian Consumer Direct, the leading provider of online credit report and products, according to which consumers with at least one open mortgage have an average Experian PLUS Score, an online credit report score of 716 whereas those who do not have an open mortgage have a score of 667. American consumers have an average mortgage amount of $136,000 with only 10% of
consumer mortgages exceeding $250,000. It also found that the month of July
records the highest number of credit inquiries for home loans and that 49% of respondents do not understand that online credit report scores
measure a person's credit risk, while 45% think incorrectly that a
higher income will result in a higher credit score. Your credit history is a very important criterion in deciding the approval, interest rates, and terms of your new financial accountability when you apply for a new mortgage, refinance a current mortgage, or take out a home equity line of credit. You should, therefore, check your online credit report before you proceed towards the above avenues so that you know how creditworthy you appear to lenders. The Experian study was compiled using the Experian National Score Index, which is based upon a nationwide sampling of three million consumer profiles. Experian's consumer credit score model, called the PLUS Score was used to formulate the index. It is a numeric representation of financial behavior based on information found in an online credit report and it can range from 330 to 830 with a higher score indicating a lower credit risk. U.S. consumers are acquiring an increasing amount of debt, such as credit card balances, automobile installment loans and real estate mortgages as credit is now more easily available than ever before. It is a common misconception that taking on debt will have an adverse effect on online credit report score. This is not true as debt, if managed well, has no negative effect as long as consumers do not extend themselves beyond their means. In fact, the national average credit score for consumers with debt above the national average is higher than the average credit score for those with debt below the national average. The national average Experian PLUS Score(SM) for consumers is 677. If your online credit report score is low, you will most likely end up paying greater mortgage interest rate and your monthly payments will also be higher. As such it is necessary for you to check your credit scores periodically, correct any errors on your reports and take steps to improve your score over time. To achieve a better score, you should keep paying your bills on time and keep your balances low. As an example, if your online credit score is 580, you would be liable to pay three percentage points more in mortgage interest than someone with a score of 720. According to Fair Isaac, the company that created the FICO score, the payments on a $150,000 30-year fixed-rate mortgage would be about $890 if you qualify for the best rate as against $1,200 a month if your online credit report is poor. Fair Isaac have prepared a free brochure now available online to help consumers understand their online credit report scores. About Experian Consumer Direct Experian Consumer Direct delivers superior products and services to consumers by offering quick, easy and inexpensive access to online credit reports to help them better manage their financial lives. They also provide instant access to their online credit report and score, identity theft prevention products, fraud resolution services, information protection products, special offers from online merchants and the ability to earn points and gift cards that can be redeemed at many of the world's leading retail companies. They have integrated co-branded partnerships with leading online financial destinations providing consumers with a broad range of financial services and information, which go a long way in managing your financial life. |
