FICO stands for Fair Isaac & Company and is the name for
the most well known credit scoring systems, used by Experian.
The credit bureau’s computer evaluates a complete credit
profile and assigns a score, which is used to estimate credit
worthiness. Each of the three bureaus (Experian, Trans Union,
Equifax) employs its own scoring system, so a given person will
usually have 3 separate scores. Someone with a higher score
will be viewed as a better risk than someone with a lower score.
Typically, scores will range from about 600 to 700 or above,
although some cases will be outside this range.
Back to FAQs & Common Questions
| WHAT
KIND OF SCORE DO I NEED FOR A HOME LOAN? |
There
are as many answers to this question as there are loan programs
available. Most lenders will take the average of all 3 scores
to evaluate an application. "Niche" loans, such
as Easy Qualifier and low down payment loans will have the
higher FICO requirements. For more information regarding your
fica scores we will be glad to reccommend a professional in
the field of lending.
Back to FAQs & Common Questions
| HOW
IS MY SCORE DETERMINED? |
The
FICO model has 5 main elements:
 1)
Past payment history (about 35% of score) The fewer the late
payments the better. Recent late payments will have a much
greater impact than a very old Bankruptcy with perfect credit
since.
Myth
- paying off cards with recent late payments will fix things.
Payoffs do not affect payment history.
2)
Credit use (about 30% of score) Low balances across several
cards is better than the same balance concentrated on a few
cards used closer to maximums. Too many cards can bring down
the score, but closing accounts can often do more harm than
good if the entire profile is not considered. BE CAREFUL WHEN
CLOSING ACCOUNTS!
3)
Length of credit history (15% of score) The longer accounts
have been open the better for the score. Opening new accounts
and closing seasoned accounts can bring down a score a great
deal.
4)
Types of credit used (10% of score) Finance company accounts
score lower than bank or department store accounts.
5)
Inquiries (10% of score) Multiple inquiries can be a risk
if several cards are applied for or other accounts are close
to maxed out. Multiple mortgage or car inquiries within a
14 day period are counted as one inquiry.
Back to FAQs & Common Questions
| HOW
CAN I RAISE MY SCORE? |
Your
score can only be changed by the way that item is reported
directly to the credit bureaus (Experian, TU, Equifax). Written
confirmation from the creditor is required. It is best to
make these corrections before you try to purchase a home,
because you can never be sure the exact impact a change will
have on your score. Back to FAQs &
Common Questions
| WHAT
DOES THIS MEAN TO ME? |
You
should have your credit reviewed BEFORE you look for a home,
and work with a PROFESSIONAL
loan officer to make sure your loan is based on the most
accurate information. Back to FAQs &
Common Questions
|
