Posts Tagged ‘FICO’

CREDIT SCORES and MORTGAGES

 | Comments Off on CREDIT SCORES and MORTGAGES

As most of us know our Credit Score (FICO) has a major influence on whether we can get a Mortgage at all. What’s not always understood is that it also has a huge impact on the interest rate we can get. Here’s a simple way of figuring out how big that impact can be for different scoring ranges: 

*    CREDIT SCORE BELOW 620:

A credit score of 620 or lower places you in the “sub-primeborrower category. If you are considered a sub-prime borrower, you will likely pay 3 percent more on a mortgage loan than someone with excellent credit and will likely pay double-digit interest rates on a home equity loan or a line of credit.

*    CREDIT SCORE OF 620 TO 674:

This credit score range is still considered below optimal. If your credit score falls in this range, you will likely pay 2 percent more than borrowers who boast excellent credit ratings.

*    CREDIT SCORE OF 675 TO 719:

If you find yourself in this credit score range, you should find it relatively easy to procure a good loan. You will typically pay up to half a percentage point more than a borrower who has excellent credit in regards to a loan.

*    CREDIT SCORE OF 720 AND ABOVE:

If you possess a credit score at or above 720, you have an excellent credit score. This means you will be able to acquire a lender’s most favorable rates and you are in the position to shop around thus finding the best loan for you in regards to term, interest rates and other factors.”

by the way….

Factors contributing to someone's credit score...

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

 

If you are considering getting help with Credit Repair be aware that the vast majority of organizations claiming to do this are scammers and/or crooks.

I can personally recommend Ken Strey for a professional service. His contact info is below. 

Scorewell Inc. | 925-478-4732 | kenstrey@scorewellinc.com | http://www.scorewellinc.com

 

 

Enhanced by Zemanta

VANTAGESCORE

 | Comments Off on VANTAGESCORE

FICO logo

Factors contributing to someone's credit score...

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

There’s a lot of talk about the new Credit Scoring model called VantageScore. Proponents say that it will boost your score and help people with no credit history build a strong credit score.

Here’s the bottom line: don’t waste a single memory cell on it.

Now… the back-story for those those want it:

Until the majority of lenders are using a new scoring model, the FICO score will remain the main credit scoring system out there.

As of right now, major lenders like Fannie Mae and Freddie Mac are not using VantageScore. In fact, I have never heard of a single lender who does use it.

When deciding whether to extend a loan to you, your potential creditors want to know how risky you are. Currently, the model they use to determine your creditworthiness is FICO, and almost exclusively FICO.

So if you want to qualify for a loan, or if you want to qualify for better terms on your existing loans/credit cards, you must follow the FICO model and do things which will improve your FICO score.

Ignore everything else because it will not make an ounce of difference if your lender is not looking at it. All it will do is paint an unrealistic picture of what loan terms you can expect.

I want you to focus on reality. And the reality is this: Almost every lender out there relies on FICO and only FICO when determining a credit score.

NOTE 1: When referring to FICO I mean the credit scoring model used by the 3 major Credit Bureaus, EQIFAX, TRANSUNION, and EXPERIAN.

NOTE 2: Be very careful of anyone claiming to be able to improve your Credit Score. I am aware of many scams but only 3 legitimate services that will actually get it done.

Enhanced by Zemanta

FICO REASON SCORES

 | Comments Off on FICO REASON SCORES

Factors contributing to someone's credit score...

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

Have you ever wondered about the group of numbers following the FICO Score on your Credit Report?

e.g.  FICO Score: 500 38 21 18 05

They are not greatly complicated but are seldom used as they should be. Put simply they are the FICO “Reason Codes” and explain why your score is not higher than it is.

In the above example with the poor 500 score the meanings are:

(38) Serious delinquency and derogatory public record or collection filed. (90+ day late payments AND a public record, or account in Collection)

(21) Amount past due on accounts (current late payments)

(18) Multiple accounts with history of late payments

(05) Too may accounts with balances owed.

These are the 4 most important things related to this individual score and the things that need to be dealt with in order to improve the score.

Remember, they are not the reason your score is so low; they are the reasons it is not better.

Enhanced by Zemanta

FICO FACTS

 | 2 comments

CREDITOR

It’s a common misconception that if a bill is charged-off on your Credit Report it is no longer due. WRONG the Debt is still owed. If the creditor is unsuccessful in getting the account paid, it is written-off their books as a loss. The creditor has now categorized this account as late stage delinquency, and is sold for cents on the dollar to a third party collection agency for them try to collect.

COLLECTION AGENCY

The next step is the collection agency will contact you for payment of the bill. Now you are dealing with the collection agency, which is usually more aggressive than the creditor. They will call you and send you a verification of the bill and frequently stretch the law in trying to get you to pay something.

THE COURTS

If all else fails the Collection Agency may choose to sue you for the amount owed plus penalties. This could result in a Judgment against you.

IMPACT MULTIPLIED BY THREE

This result leaves you with 3 dings against you on your credit report. Each of these will have severe negative impact on your credit score, and remain on your credit report for seven years.

1. You will have the original information on the bill that was charged-off by the creditor.

2. A new account is created by the third party collection agency, which is categorized as a collection account on your credit report.

3. If the collection agency decides to sue you, a judgment is reported in the courts and shows up on your credit report.

You can see there is a snow ball effect of not paying a bill. This can have a major impact on your credit and take years to recover.

For detail help on all Credit Related Issues contact:
kstrey@scorewellcredit.com

MORE FICO FACTS

 | Comments Off on MORE FICO FACTS

Not just a Mortgage Issue

 Most people know that your Credit Score (FICO) has a significant effect on whether you can get a Mortgage.

What is not generally known is that FICO is increasingly being used by Employers, Insurance Companies,

Utility Companies, Apartment Complexes and a growing list of other organization which provide services for regular payments.

These and many other groups consider it a good indicator of general reliability and whether bills will be paid on time.

Enhanced by Zemanta

FICO FACTS

 | Comments Off on FICO FACTS

Potential home buyers, or anyone thinking of refinancing are finding that their credit scores are vastly more important now than in the boom years. However, they seldom know the effect of even one “minor”  bad credit event.

For example:

Tom has a barely o.k. 68O FICO score but makes a 30 day late mortgage payment. It will take 9 months for his score to get back to that level assuming no more late payments.

Dick has an good 720 Fico and makes a 30 day late payment. It will take 2 ½ years to get back.

Harry has a very good 780 FICO but after a 30 day late pay it will take 3 years for him to get back to that level.

The financial costs of  lower credit range from being unable to get any loan, to paying a higher interest rate and higher fees for anything below 720, finding it virtually impossible to get any loan below 640.

The moral is of course to pay your bills on time at all times.

NOTE: Getting and maintaining good credit is a greatly misunderstood process with mountains of free but inaccurate advice. I can strongly recommend Ken Strey kstrey@creditlinei2.org for pretty much anything related to your credit.

Enhanced by Zemanta

FICO 8

 | Comments Off on FICO 8

The new FICO® 8 Score is fast becoming the new standard. It has already been adopted by over 3,000 banks and other financial institutions.

But is it good news or bad news for you as a consumer?

Their are multiple small changes but the two I see as the most significant are:

1. Multiple late payments will now carry a heavier penalty than in the past. These are the 30, 60, 90 day lates that show up under “Derogatory” accounts.

2. The penalties for using too much of any credit are increased. If you have any type of credit with a maximum amount available your score will be lowered if you owe  more than 30% of the total maximum allowed. This can be your VISA or Sears card, or a Home Equity Line of Credit. NOTE.

 This applies even if it is a company credit card in your name.

The result of these changes can mean your credit score can be lowered even if you never had a late payment in your life. Too much credit availability is a no-no. This will apply most frequently when applying for a mortgage, when the bank will assume your total debt to be the maximum amount of money you can get at with just your signature.

Enhanced by Zemanta