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May 2010
Credit Bureaus just can't get it right!
A discussion on a well guarded secret to keep your credit scores suppressed… One of our consultants popped in yesterday afternoon to drop off a deal (a good thing). He was telling me of a situation he ran into and wanted to know what kind of an effect it could have on his prospects credit score. Well the situation was a $110k line of credit which had a balance of 96k. This particular credit line was rated R-1 paid as agreed. A perfect rating, right? or was it? Unfortunately we see this kind of thing all the time… […]
What are mortgage lenders looking for?
Today, I’d like to tell you what mortgage lenders look for in when deciding on granting your request for a new mortgage loan. Now this is not meant to be an underwriting class but a basic understanding of the process and what you’ll want to consider as you begin thinking about buying a new home. When you’re looking for a new mortgage many lenders evaluate your credit based on the “Three C’s.” Credit Is it likely that you will repay the loan? Are your payments on time and up-to-date? Are you financially stable and reliable? What are your credit scores? Today’s marketplace, most conventional lenders require your scores to be in the 700+ range and most FHA loans a 620 score or higher. Capacity Are you able to pay the loan? What kind of outstanding personal debt do you have? Do you have enough earning power and net worth to repay a mortgage or home equity line of credit? […]
FICO's Toy Model Scoring System
Is there anyway to understand the FICO scoring system? That is the hundred dollar question! The FICO score created by the Fair Isaac Company is one of the most shall I say “guarded” secrets at the credit bureau’s. So much so that even senior executives under oath, have sworn they do not fully understand the exact reason for score movements under certain circumstances. I mean why does one persons credit score who is at 750 drop 15 points with one 30 day late on a charge card and other person’s whose score is at 650 drop 50 points with that same 30 day late? No other derogatory is reported yet Mr 650 had three times the point deterioration than Ms 750! Fair? Well, the truth is that there are so many factors that have been put into this system that the average persons head will spin (even the not so average) like a top trying to figure it out! […]
Do you know the credit score breakdown?
Today’s posting will give you the FICO credit score breakdown. Knowing what to do and the areas to focus on when rebuilding your credit or if you’re looking to increase your credit scores can be the difference between success and failure. The term credit score usually refers to your FICO score, a number based on a formula developed by the Fair Isaac Corporation, which looks at a summary of all your credit accounts and payment history. Your FICO (credit) score determines your access to and cost of credit. Most lenders use it as the main basis for loan or credit approvals, so the higher the better and the lower the more problems. FICO score ranges from 300-850, and Fair Isaac calculates them for each of the three big credit reporting agencies: Transunion, Equifax, and Experian. Here’s how your score is determined: […]