Good Credit will save you a lot of money on a home mortgage.
Yes, one number can absolutely change your life. Your credit score, which is the standard measure of credit risk, is critical when you apply for a home mortgage and is the determining factor in whether a lender makes a "yea or nay" decision. The "good ol' boy days" are gone, and the fact that you might know your lender is likely of no importance. He or she will seek out your credit score to determine whether you'll likely meet your future obligations and may, or may not, buy a home.
There are three major credit-reporting agencies Equifax, TransUnion, and Experian - and each provides critical information to lenders, thereby reducing fraud and credit losses. Furthermore, each takes a different approach to calculating your credit score. Equifax's model is called BEACON, TransUnions's is called EMPIRICA, and Emperian's is called FICO, the best known, developed by Fair Isaac Corporation.
Your credit file contains personal data, such as birth date, aliases, current and previous addresses, judgments, tax liens, notices of default, bankruptcies, and information on most of the payments you've ever made on homes, cars and/or credit cards.
However, the most important information the agencies use is the following.
All information is factored in and assigned a value. An FICO is then determined with a range from 300 to 800. The higher your credit score, the better. In addition to getting a loan, a higher score may qualify you for a lower interest rate.
Before applying for loans, prospective homebuyers are encouraged to check their credit scores with the three agencies and dispute and correct inaccurate data. Find out your own score before a lender surprises you with a low number.
Lenders recheck a buyer's credit the day before closing? Remind buyers that they should not apply for any new credit after they complete the mortgage application. If for some reason they do open a new credit account, they should provide details of the new account to the Mortgage Banker as soon as possible. The day before closing is too late.
In General it takes time and discipline to improve your credit score. Don't let anyone tell you otherwise. The only person that can improve your credit score is you.