Castle Commercial Mortgage: Understand FICO/Credit Scores

What is a Credit Score and how does it help me?
…Credit Score or FICO Score (Fair Isaac) is calculated by the Credit Bureaus (i.e. Trans Union, Equifax, & Experian); it is a number between 350 (worst) and 850 (best); saying what is your likelihood to pay a loan on-time.

This likelihood is based on past payment history (i.e. credit cards, late payments, medical bills, loans, collections, etc.); size of current balances/debt, length of history, new credit and types of credit.

The better your credit score, the get better insurance (home and auto) rates, mortgage rates, more available credit (credit cards, loans) etc. Understanding how FICO Scores are calculated, may allow you to better manage your Credit and improve your buying power. All that leads to building/increasing your wealth.

FICO Score Calculations
> Payment History = 35%
o Do you pay your credit on time?
o Length of positive credit history
o Severity & Quantity of Delinquencies
> Amount Owed = 30%
o Quantity of credit accounts – too many credit cards with balances can lower a score
> Length of Credit History = 15%
o The longer the history, the better
o How long have your credit accounts been established?
o How long has it been since you used certain accounts?
> New Credit = 10%
o Research shows that opening several credit accounts in a short period of time does represent greater risk – especially for people who do not have a long established credit history
o You can establish GOOD Credit by starting with a SECURED Credit Card
> Types of Credit in use = 10%
o Installment loans (Auto/Home/Student loans)
o Revolving Accounts w/balances (Credit Cards) …debit cards do not count

We see FICO Scores get raised 40+pts if one is able to follow a Healthy Mix:
> 2 installment loans
> 3 revolving accounts with balances
> Balances on revolving debt below 30% of the high credit
> NO Collection Accounts
> NO Public Records
> NO Foreclosures
> NO Late Payments

A couple of suggestions/Credit Tips:
> Don’t Co-Sign Loans …their late payments are yours!
> Don’t Close Old Revolving Accounts no longer in use.
> Inquires may or may not affect your score depending on the rest of your credit history
> If you are a victim of Fraud, IMMEDIATELY contact the credit bureaus, your credit card companies, banks and the FTC at www.FTC.gov
> Monitor your credit – order a copy of your credit report once a year from www.annualcreditreport.com
> Pay all your bills on time or early. Even a 30 day late on a small credit card can have a significant negative impact on your scores.
> If you are planning to refinance or buy a home, do not make any purchases or run up your credit cards prior to the transaction.


Signing up on Opt Out?
Did you know that the Credit Bureaus sell your information to various entities (i.e. insurance companies, mortgage companies, etc.) …If you do not want the Credit Agencies to sell your information; or, you want to cut down on the junk mail you receive; new credit card offers; switch insurance company offers; etc. – sign up on Opt Out.

Opt Out – phone: 888-567-8688 www.optoutprescreen.com

Please contact the credit bureaus directly, if you have other questions about your credit report:

Experian
P.O. Box 2002
Allen, TX 75013
Phone: 888-397-3742
www.experian.com/reportaccess

Trans Union
P.O. Box 1000
Chester, PA 19022
Phone: 800-888-4213
www.transunion.com

Equifax
P.O. Box 740241
Atlanta, GA 30374
Phone: 800-685-111
www.equifax.com

Latest News

NEW Home Ownership Accelerator Mortgage. Pay Off Your 30 year loan in about Half the Time!! It's True and You CAN DO IT! Read more ...
Be part of our private funds. Read more ...
Understand FICO/Credit Scores. Read more ...
Review the Profit in your Real Estate Deal. Read more ...
CCMCo. Does Residential Construction Loans in Colorado. What should you do when a lender does not fund a construction project? Read more ...