Check your understanding

Check your understanding of key concepts before moving to the “Do it yourself” section.

Indicate whether each statement is True or False.

1. A person cannot do anything to significantly improve their credit score; once it is low, it stays low.

Correct!Your credit score isn’t fixed in stone. If you have bad credit scores, there are steps you can take to improve your credit health. If you find your scores are lower than you expected, you will need to engage in credit rehab.
Incorrect.Your credit score isn’t fixed in stone. If you have bad credit scores, there are steps you can take to improve your credit health. If you find your scores are lower than you expected, you will need to engage in credit rehab.

2. Most lenders have a baseline credit score by which they largely make their decision to approve or deny mortgage applicants.

Correct! Most lenders have a baseline credit score by which they largely make their decision to approve or deny mortgage applicants.
Incorrect. Most lenders have a baseline credit score by which they largely make their decision to approve or deny mortgage applicants.

3. While there are three credit agencies that each provide you with a separate credit score, you can choose which of these three scores you will use when applying for a loan.

Correct! Lenders typically look at your middle credit score (as opposed to the highest or the lowest), and you must provide all three of your credit scores (one from Equifax, one from Experian, and one from TransUnion), when applying for a loan.
Incorrect. Lenders typically look at your middle credit score (as opposed to the highest or the lowest), and you must provide all three of your credit scores (one from Equifax, one from Experian, and one from TransUnion), when applying for a loan.

4. Even if you have a credit score in the 500s, it’s fairly easy to secure a loan with the lowest interest rate.

Correct! If your credit score is in the 500s, you‘ll only be a candidate for what the industry calls subprime loans -- with interest rates a couple of percentage points higher than those offered to prime borrowers, and which often come with a number of hidden charges.
Incorrect. If your credit score is in the 500s, you‘ll only be a candidate for what the industry calls subprime loans -- with interest rates a couple of percentage points higher than those offered to prime borrowers, and which often come with a number of hidden charges.

Practice what you learned Do it yourself

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