|
Welcome
to Carteret Mortgage!
Your source for consumer information
Option Arms
Construction/Perm
Interest Only
Mortgage
Commercial Loans
Real Estate
Investor
Refinance
| |
Credit Scores
Credit scores have been around since the 50's.Today the use of credit scores
has become increasingly important in obtaining any type of loan. When financing
a house, a car or even obtaining a credit card, credit scores are a
scientific way of assessing how likely a borrower is to repay a loan.
While credit scores are
important for every application, first time home buyers tend to need slightly
higher credit scores due to the fact that they do not normally have an extensive credit
history. Here is an excellent presentation by an attorney on
improving credit scores.
Each of the three major credit scores reporting agencies utilize the same credit
scores
models developed by the California based company Fair Isaac Company (FICO), yet
each company can give you different credit scores. Each of the bureaus believes some
credit characteristics to be more important than others.
Credit scores can range form a low of 300 to over 800. Many people believe
that credit scores are only based on whether or not you pay your bills on time.
Credit scores are actually based on a complex system analyzing different
characteristics of your credit, such as:
- Payment history, including any collections, judgments, foreclosures
and/or bankruptcies.
- The number of inquiries into your credit report in the past 6-12 months. A
large number of inquiries can indicate that you have been trying to obtain
too much credit too quickly.
- The amount of outstanding balances compared to your available credit
limits. A borrower with $4,995 on credit cards and loans with $5,000 in
credit limits will be penalized. Even if the payment history has been
perfect.
- How long accounts have been open. The longer that you have had good credit
the better.
These are only a few of the over 30 different factors used in determining
your numbers. None of the 3 major bureaus have been required to divulge their
formula for determining these numbers. However, they must still abide by the Fair
Credit Reporting Act and they do not consider the following:
- National origin, race, marital status, gender and religion.
- The amount of money you might have in the bank.
Banks and lenders are not required to disclose your number to you.
However, I will and you should always ask. I will also provide you with a copy
of your report upon request.
If your number is low, there are no quick fixes. But there are some
things to keep in mind when trying to maintain a high number:
- Periodically keep tabs on your report for inaccuracies. You can obtain a
copy from each of the Major Reporting agencies.
- Pay all your bills on time.
- Use only the accounts you need and can afford to pay.
- Don't max out your cards.
- Don't apply for or open many accounts in a short period of time.
- Don't try to change a number overnight by suddenly closing or opening
accounts. This could backfire.
As a Certified Mortgage
Planning Specialist, I offer an analysis of
your situation today can make suggestions on how small changes in how
your consumer and mortgage debt is structured today can have a life changing effect in the years
to come. Read more
about this free, no obligation service.
New! View
my
Wealthbuilder presentation and learn the safe way to manage your debt
and fund your retirement.
I hope the information on this page was useful to you. Please scroll down
to view my
Mortgage Market Guide. It is a weekly publication explaining the financial markets
from a consumer's perspective that is available on this website or by
email subscription. I have nearly 8,000 subscribers today and would be happy to have you as
well. Your email address will never be used for any other purpose.
|