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What are credit scores
What are credit scores - A credit score analyzes your credit history by considering many factors. These include but are not limited to amount of debt, payment history and limit to balnace ratios.

Outstanding Credit Balances are another important factor in computing credit scores. Optimal Credit Balance should be under 35% of available credit. This gives you the best rating for this segment of credit score computation. Over 35% isn't as good but still doesn't hurt your rating. Between 90-100% of balance to available credit starts to hurt your rating. Over the 100% really adds a premium to your sitatuation. This is one thing you don't want to do.

You need to think of your credit score as this way-as your life. It is a very important and serious factor. It dictates what type of borrower you may be and establishes whether or not you will be trustworthy to lenders.

The term FICO is named after Fair Isaac Corp, the firm that developed the scoring model. Your FICO score is calculated using a computer model that compares the information in your credit report to what's on the credit reports of thousands of other customers.

Scores also fluctuate depending on credit activity. Since credit bureaus only calculate your score at the lender's request, it will be based on the information in your file at that particular credit bureau, at that particular time only.

Credit scores have various factors that determine what score you will receive from each of the trade bureaus. Your existing use of credit (existing debt to what is actually available), the payment history, the time length your accounts have been open will all influence your scores.

In addition to examining a loan applicant's credit scores, lender banks also scrutinize all other items reported in the credit report. For example, when considering loan qualifications, most banks set limits to the number of mortgage late payments shown in credit reports, regardless of the applicants' scores.

Payment History is the most important of the 5 categories. It deals with on time payments. Even one late payment can hurt your score. If you find yourself running tight each month, it is definitely better to make all your minimum payments on time, than attempting to pay something late. If you have to make a choice between making a credit card payment late or your mortgage payment late, choose the credit card. Your score will drop precipitously with a late mortgage payment. Also, remember that a late payment is one that is 30 days late from when it is due. Not just beyond the grace period.

It is very important that you do the best you can to obtain and maintain a good credit score. In today's world employers, insurance companies, landlords, and alike require a good credit score in order to utilize their services.

If you always pay cash and have no credit accounts you may have no credit scores. This does not automatically disqualify you for a home loan but it does make obtaining home financing a little more difficult. There are ways to quickly establish credit and have scores show on your credit report.

Credit Scores are calculated using 5 subcategories: Payments History, Outstanding Credit Balances, Credit History, Type of Credit, and Inquiries. Each of these play an important role in your credit score.

There are many lending institutions that specialize in offering mortgages to borrowers with less-than-perfect credit. So even if you have had credit issues in the past, you should not think there is no mortgage option available to you. Give me a call at 415-617-5448 and I will analyze your situation and present you with multiple home financing options.

Not only do credit scores determine your approval for a loan, but they also determine how much credit you can apply for, the interest rate you will pay for that loan and the length of time you can borrow that money.

Another of the 5 categories in determining your credit is type of credit. The ideal types of credit the credit bureaus look for are mortgage, car note, and credit cards. The most balanced report has one mortgage, one car note and 2 or 3 credit cards. If you don't have one of these, DON'T run out and get one to get a better score. Contact Home Jones who will be able to help determine what, if anything, is needed.

A great way to improve your credit scores is to check the reported balances and limits on revolving items, such as credit cards, on your credit report. A good rule of thumb is if your balance on any one card is more than 50% of the credit limit on that same card, the card may be hurting your credit score. Improving the score may be as simple as calling your credit card issuer and requesting an increased limit, however you should not close old accounts or open new ones without first discussing the matter with a financial professional equipped with credit score simulation software.

Credit scoring was originally used for credit card risk assessment. Mortgage Lenders have been using credit scoring since the early 1990's to determine the default risk of a particular borrower. Some loan programs, such as FHA loans and some portfolio lenders, will assess the total credit history rather than soley using credit scores.

A FICO credit score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit, inquiries from employers, or your own requests to see your credit report.

Credit scores can range from 350-900.

The number one factor in determining your credit score is your payment history. If you make payments 30 or more days late quite often you will have a much lower credit score. If you pay your bills on time then your credit score will demonstrate this and be much higher. Your payment history generally accounts for roughly 35-40 percent of your total score. Since your credit score is very important in many areas of your life, it is important to work hard at keeping your credit score high.

Your credit score is the number that creditors use to gauge your risk factor. The higher the number, the more likely you will be approved for your loan.

If you have a low credit scores be sure to check your credit report carefully; it may contain errors that are bringing down your score. If this is the case ask your preferred mortgage professional about correcting the errors.


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