Archive for the ‘fico score’ Category

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Top Credit Score – FICO score Myths

Thursday, May 22nd, 2008

Your credit score or Fico score is the most important element in your financial life these days. Landlords, employers, banks, utility companies and insurance companies all scrutinize your credit score. This credit score is what sums up everything within your credit report. Your credit scores range between 300 to 850.

Yet according to a survey recently revealed, nearly half of Americans have no idea what is on there credit report until it’s too late. According to recent studies people are mis-lead into thinking certain situations determine how high or low a credit score is. Despite all the news media and internet information the fact is the lower your credit score the more you pay. Also in some instances you get that ugly word you were told when you were young, NO. No one likes to be told no, it makes you feel like a child again, even though you are a grown up. If you are applying for mortgage and your credit score is a 610, you could get denied or pay $400.00 dollars a month more because of the risk based pricing now in the banking industry.

While all of this is sinking in, make sure you are not falling for these credit score myths:

Myth 1: Credit Card offers are hurting your credit score. Credit Card offers do not affect your credit score. Now if you respond to the offer the inquiry could lower your credit score. Fair Isaac says that too much credit does not affect your score either, but high credit card balances will lower it.

Myth 2: The higher your salary the higher your credit scores. Paying down credit card debt will lower your credit score. However the amount of money you make, or how much you have in the bank has nothing to do with your FICO score. So in other words your net worth or the amount of money you have coming in is not factored in the credit scoring process according to Fair Isaac the creator of the FICO score.

Myth 3: When you get married your credit scores get merged. When you get married this is simply not true. The only thing that gets merged are accounts you acquire jointly. If you both apply for the same card, then that card and its history shows up on both credit reports.

Myth 4: Shopping around for a loan hurts your score. When you apply for a mortgage, they will pull a recent copy of your credit report which will give a inquiry on your credit report. FICO allows you to shop for a mortgage with multiple lenders with out it hurting your fico score during a 30 window. So during this 30 day window multiple inquiries for a mortgage will only count as one inquiry according to Fair Isaac, MyFICO.

Myth 5: You only have one Credit Score. You have a credit score with each credit bureau. Your credit score could vary as much as 50 points, which is why you need to check your credit score with all 3 credit bureaus.

Myth 6: Checking your own credit report will lower your credit score. This is a question I get all the time. When you are pulling your own credit report it is considered a soft inquiry, which is not factored in the credit scoring process according to MyFICO.

Myth 7: Your age, sex, income are factored in your credit score. According to MyFICO none of this has a factor in your credit scoring process. What the FICO score model is looking for is your credit history with creditors which you owe a debt.

Myth 8: Disputing a item on your credit report will get it removed. This is a common misconception that if you dispute a item it will get it removed. If you dispute a item and you actually owe it, and its reporting within the 7 years required by law, it will not be removed. Now getting inaccuracies removed from you credit report will increases your credit score. Remember collections and charge offs report on your credit report for 7 years from collection date. If you dispute that item during that period, you are wasting your time.


Author: Mike Clover

CreditScoreQuick.com

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What’s in your FICO® Score.

Tuesday, April 29th, 2008

Fico scores are calculated from different data within your credit report. This information is grouped into five categories. The Chart below will reflect this as well as the percentage of importance for each category.

These percentages of these categories are for the purpose of the general population. For example someone that is new to the credit scène these percentages may not apply.

Payment History

• Number of accounts paid as agreed
• Presence of negative Public Records(Judgments, bankruptcy, suits, liens, wage attachments, etc ( Collections, and/or delinquency(past due items)
• Severity of delinquency( how long past due)
• Amount past due on delinquent accounts or collection accounts
• How much you’re past due on accounts or collections.
• How many collections you have
• Account payment information on particular accounts (installment loans, credit cards, retail accounts, finance company accounts, car notes, mortgage, etc…)

Length of Credit History

• Time since account activity
• Time since accounts opened
• Time since account opended, by type of account

New Credit

• Time since account was open, by credit type
• Time since credit inquiry
• Number of recently opened accounts, and proportion of accounts recently opened by account type.
• Re-establishment of credit after recent credit problems
• Number of recent credit inquiries

Amounts Owed

• Proportion of installment loans still owed, proportion of balances to original loan amount on certain installment loans
• Number of accounts with balances
• Amounts owed on specific types of accounts
• Amount owed on accounts
• Lack of specific types of credit balances
• Proportion of credit lines used (proportion of balances to total credit limit on certain types of revolving accounts

Types of credit used

• Number of (prevalence, presence, and recent information on ( different account types such as credit cards, retail accounts, mortgage, installment loans, and consumer finance accounts.

*Please take note
Your FICO score takes into consideration of all these variables discussed.
No one piece of information or factor will determine your score alone.

The importance of any factor depends on your over all credit history.
It is really hard to single out any other factor over another, since all factors take part in the overall scoring process. What is important is the mix of information being reported within your credit report.

Your FICO score only looks at information within your credit report. However lenders look at other information outside this report to also make a credit decision.
Example:
• Work History
• Salary
• Rental History
• Kind of credit you are requesting

Your score considers both negative and positive information on your credit report. Late payments will lower your credit score, but establishing or re-establishing a good payment history will increase your credit score.

CreditScoreQuick.com

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FHA loan Basics

Friday, April 18th, 2008

FHA loans are loans that are insured by (HUD) Housing Urban and Development. FHA loans have been around since the 1930’s right after the “Great Depression.” This was when 4 out of 10 households owned a home. (FHA) Federal Housing Administration is the savior for our current market just like it was back during the roaring 30’s.With FHA loans especially during a credit crunch like we are currently are in, you can rest assure banks are willing to be more lenient to approve credit challenged borrowers with FHA financing. The reason is FHA loans are insured by HUD, and if the borrower looses the home HUD will pay a claim to lender for the loss. FHA is the largest single insurer of loans in the world.

FHA Advantages.

• Lower interest rates, typically interest rates are lower on FHA loans with the banks since they are government insured loans
• Only requires minimum investment from borrower of 3% down payment, which can be eliminated by Down Payment Assistance. So essential you can get a 100% financing with FHA loans. Note: Requires Seller participation
• If you have less than perfect credit you can typically can get a loan with FHA, they usually like to see 12 to 24 months clean credit report history. You can even get a loan while in chapter 13 bankruptcy.
• No Credit Score Requirement
• Recent loan limits increased-varies from state to state; go here to find out. For example you can buy a home in the state of Texas with FHA up to $271,050. Depending on if your state is a high cost area; obviously this loan limit would be higher.
• Will allow alternate lines of credit if not good history is on credit report.
Example:
1. Letter from any utility company stating you have been on-time with your payment history for that last 12 months.
2. 12 month payment history from car insurance company, cell phone company and even daycare will work.

If you are currently in the market to buy or maybe you feel like you need credit repair, what ever your direction is, getting a FHA loan is not as hard as you think. FHA gets people approved that may not get approved with other loan types. The first step is to examine where you are at with a lender and get the ball rolling. IN this current market some lenders are requiring you to either have a 580 credit score or higher. They will also allow no credit score but your interest rate is higher than current market rates. This is going on even though FHA has no credit score requirement; this is due to bad performance of loans below the credit score benchmark of 580.

CreditScoreQuick.com

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Disclaimer: This information has been compiled and provided by CreditScoreQuick.com as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.