Your Credit Score: The (Other) Key To Your New Home

     Each potential home buyer dreams of the day they’ll finally get the symbol of independence, security and prosperity: the key to the front door of their new home. Before you get that one, though, there’s another key you need to craft. Your credit score, a numerical representation of your credit history as an indicator of your ability to pay your bills, will determine a lot about your housing situation, from how much house you can afford to the interest rates you’ll receive.
     Your credit score is determined by three different credit monitoring agencies: TransUnion, Equifax and Experian. Each has its own method for determining which events are most important to your score, so your number may vary depending upon the agency. Paying debts off, making payments on time and using only a small percentage of your available credit make your score go up. Missing payments, opening many credit accounts or carrying a significant balance of debt from month-to-month will decrease your score.
     Less important than the actual score is your score grouping. Lenders tend to lump borrowers into four categories: sub-prime, near-prime, prime and super-prime. Different lenders break these categories down at different score points, but the terminology and treatment are fairly universal. Super-prime lenders get the lowest rates, because they represent the lowest level of risk for the lender. Sub-prime and near-prime borrowers will have a lower cap for the size of the loan they can take and will generally pay a higher interest rate. If you’re working on raising a low credit score, a good target number is 640. This will generally put you in the prime group and ensure you don’t have to pay extra on your mortgage because of credit. If you’re building good credit, 740 is generally the lowest super-prime score, which will give you access to some of the best rates and terms available.
     If you’re going house-hunting in the next year, there are three steps you can take right now to improve the terms of your mortgage. Check your credit score, take steps to raise it and manage your loan in other ways. Taking these three steps will put you on the fast track to affordable home ownership!
Check your credit score
     You can check your credit report for free once a year at annualcreditreport.com. Note, though, that there may be a nominal fee to receive your actual score along with the report. There are many similar websites, but many of them will charge you. Annualcreditreport.com is the site created by the three credit companies to provide consumers with transparent access to their financial information.
If your score isn’t at the level you think it should be, there may be errors or inaccuracies that are dragging down your good name. Look for accounts you don’t recognize or balances that are not up-to-date. You may even catch an identity thief red-handed! The report comes with instructions for challenging any item. In most cases, you can leave a note for lenders in the file explaining the item under dispute.
Boost your credit score!
     There are no simple tricks to bump your credit score in advance of a mortgage. You need to develop a 6- to 12-month plan to boost your credit score before getting your mortgage by making sound financial decisions. Demonstrate to lenders that you can use credit responsibly, and your score will increase.
     One of the biggest drags on a credit score is percentage of utilized debt. If you’re carrying a balance on credit cards, this tells lenders that you may be using credit to pay for your day-to-day expenses, and that lending you more money would not be a smart move for them. Getting balances to zero should be goal number one!
     Also, take care that you don’t make any major purchases using credit right before you attempt to qualify for a mortgage. Even if you’re expecting a major windfall, such as an overtime check or a tax refund, creditors don’t see that on your report. Hold off until you have the cash in hand before you splurge on a new TV or car!
     If it’s a lack of credit history that’s hurting your score, Mutual Credit Union offers “credit builder” loans. These involve borrowing a small amount of money and making regular installment payments on it.
What else?
     If your credit score is low, and there’s nothing you can do about it, you may need to take other steps to get a better position on a loan. You might try boosting your down payment or shopping for less expensive houses, so you’re borrowing a smaller sum of money. A co-signer, another responsible party willing to take on the risk of the loan, can also improve your terms. If your debt is a serious problem, perhaps moving into a new house isn’t a good short-term priority. Focus instead on paying off debt and saving up for a down payment. This can keep you from getting stuck with a house payment you can’t afford before you’re ready for it.

Welcome to the Mutual Credit Union Blog!

  Chartered in 1931, Mutual Credit Union is Mississippi’s oldest credit union, and one of the Southeast’s most respected. Through the years, our State chartered financial institution has grown from humble beginnings into a world-class financial services organization with over 21,000 active members and over $188 million in assets.

Mutual Credit Union serves those who LIVE, WORK, WORSHIP, VOLUNTEER, or ATTEND SCHOOL in Warren, Hinds, Yazoo, Issaquena, Sharkey, Claiborne and Copiah Counties.  Offering the complete continuum of consumer financial services, Mutual Credit Union provides members with the same level of service as commercial banks for substantially less cost. Whether it’s below commercial bank rates on loans or the lowest possible fees on share draft (checking) accounts, Mutual Credit Union members invariably get more for their money.

Working closely with our members, Mutual Credit Union has continually evolved to meet their changing needs. For instance, we are aggressive when it comes to adopting the latest technology. We were the fourth credit union in the entire United States to offer online account access and related Internet services. But perhaps the most important benefit Mutual Credit Union members realize is a personal connection with the organization and its employees. We are based in Vicksburg, Mississippi, and that’s where all of our decisions are made. In turn, our members enjoy easy access to local decision makers, as well as the peace-of-mind that comes from doing business with the area’s only “hometown” financial institution.

In short, we hold each member in high regard, and we trust it’s safe to say, “Mutual Credit Union has a Tradition of Value.”

Mutual Credit Union relies on 12 volunteers to look to the best interest of its members.

The Board of Directors is comprised of 9 volunteers with 3 year staggered terms who are elected by the MCU members at the annual meeting.

While Mutual Credit Union has a CEO, President and staff to manage the day-to-day affairs and direction of the credit union, the Board of Directors is tasked with the general management of affairs, funds and records of Mutual Credit Union.

Along with the Board of Directors, the Supervisory Committee is made up of 3 volunteers also elected to 3 years terms at the annual meeting.  The Supervisory Committee is responsible for the auditing of receipts, disbursements, income, assets and liabilities of the credit union.

In compliance with the bylaws of Mutual Credit Union, a meeting is held each year prior to March 31st where all members of the credit union are urged to attend and participate in determining the direction of the credit union. The annual meeting is the time for volunteer elections – every year 3 board member seats and 1 supervisory committee seat comes up for re-election and the members of the credit union vote for the candidates to sit on the Board of Directors and Supervisory Committee.  This is one of the special actions that makes being a member of a credit union unique and rewarding.

Members have a say in the future of the credit union by selecting the Board of Directors. We also have a lot of fun at our annual meetings; with food, games and prizes, taking part in the future of your financial institution couldn’t be more rewarding!

Welcome to a new way of banking, that has been our way since 1931 – members helping members, where our focus is YOU!

-Susan

For more information visit Mutual Credit Union’s website.