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Hello and welcome to the TLC Morgan show we pick up in chapter 6, we’re discussing how to apply for a Colorado Springs mortgages credit scores, what they are, how they work and how to improve them. Credit scores which came in at full force in the late 1990s have changed Way. Mortgage Loan approvals are issued much the way automated underwriting systems have done establish your credit. History is a requirement for obtaining a mortgage, and a credit score is the number assigned to quantify the quality of credit understanding of credit scoring in mortgage lending work hand-in-hand can give you the upper hand when negotiating a loan terms, section 6.1. What are credit scores? Credit scores are numbers that are derived from a Consumers, Credit history. The number reflects the various credit you tails in a consumer’s past. People with higher credit scores, get better rates than those with low credit scores score. Also attempts to determine the likelihood of a default on a loan, the higher the score, the less likelihood of missed payments, the lower the score, the greater the credit risk, at least according to the scoring little credit scoring it’s been around for years. It was just done manually, so many points for paying loans on time. Give so many points for paying loans on time. So much for job stability, more for low debt ratios and so on. Credit scoring was used mostly for credit cards. Have you seen all the signs in the mall or at the department store advertising instant approval for a store account? They use a method of scoring your basic information, whether you own, a home or rent. Your income, where you lived excetera, is entered into a database in your credit, Colorado Springs Mortgages is reviewed by a software program. While you wait a few moments later, while I shop til, You Drop, this might be the case before you’re applying for a Colorado Springs. Mortgage credit scoring for mortgages is relatively new compared to other consumer lending like credit cards and installment loans. Credit scoring for the Morgan for mortgages was developed by a company called Fair Isaac Corporation or FICO. When you hear the term FICO being used generically such as what is your FICO, Colorado Springs Mortgages it really means what is the credit score that the fair Isaac Corporation is calculated for you all 3 repositories use the FICO scoring system, but their credit scores are usually different, because the Three repositories: pull information from different parts of the country and collect different information. Credit scores can be as low as 300 or as high as 850.

Personally, I’ve never seen a score higher than 8:10 and if there is someone out there with an 840 I’d like to meet them, I’m not saying it’s impossible. I’Ve just never seen one people with excellent credit generally have their credit scores at 7:20 or above good. Credit starts around 680 and average credit is around 660 scores below that make be considered damaged or impaired Credit Credit scoring is not an exact science, at least to the general public. How credit scores are calculated is not divulged to the public, because credit reporting companies want to keep people from manipulate manipulate in this course, score itself is more of a two-year overview of recent credit, Behavior section 6.20. What makes up a score? Colorado Springs Mortgages Keep this in mind when you’re looking for a Colorado, Springs, mortgage America, values or sign your payment patterns available, credit number of credit inquiries and type of credit scores, give greater weight to certain payment characteristics, your payment history and how much you owe carry the most weight. Approximately 35 % the score is derived from your payment patterns and around 30 % from the amounts owed. If you can get a handle on these two items, you’ll find the other scoring factors will take care of themselves. Your payment pattern simply means paying paying on time. If you’ve never had a late payment on a credit account, then this fact alone contribute significantly to your scoring. If you had a late payment or to recently, this fact will also hit your credit score fairly hard, especially if it’s this late payment is within the past. Two years, recent late payment on a car loan, for example, can drop a 700 credit score to 650 in a heartbeat another late payment you’re in the low 600. But if you paid your account sometime, you can also expect your credit score to be high as long as course, as your other factors aren’t being damaged. Keep this in mind when looking for a Colorado Springs mortgages. The next most important scoring characteristic is your account balances. Sometimes called your available credit credit scoring. Companies want to see that you have credit accounts, but they don’t want to see your balances approach or exceed your credit limit.

For instance, say you get a new master card with a ,000 limit. Your credit score will drop. If you approach the limit and drop further still, if you exceed it, making minimum payments with high balances on your credit card will slowly around your score, go over your credit line and you’re, really not your score down section 6.3. What things my payment history affect! My credit score credit scores can be affected by how often you make your payments on or before the due date. The credit scoring model reviews the existence of any late payments and how late they actually were. In 30-day increments and 90 day, late payment will hurt your score more than a 30-day late payment. That is, unless the 30-day late payment was from last month and the 90-day late payment was 5 years ago. Remember that scores concentrate more on recent behavior, that on Old payment, history also covers collection, accounts or charge off bad debt. The original creditor simply given up hope on collecting and include searches of public records for bankruptcy filings judgments are tax liens. These are courts are factors when applying for Colorado Springs mortgages, section 6.4. What about my amounts owed? What is most important amount, so it is relatively easy to identify its how much you out compared to how much you’re allowed to borrow. But here again conventional credit, wisdom and credit scoring, but heads advice just a few years ago, suggested close an e-closing. Any outstanding accounts that had zero balances or if there were accounts with small balance, is paying them off and closing them out. Why, when human beings under roadloans to loan credit standards, this might have been good advice, heck it still good advice, but the impact on credit score on a credit score could backfire since amounts owed account for nearly a third of your credit score. You need to be very careful how you treat the scoring Factor. Underwriters can look at available. Credit is a Bad Thing, regardless of whether you used. If you got ,000 of credit Available to You among various credit cards, then who’s to say you won’t go out and charge every bit of that just after your home closes. If you had racial issues with simply buying the house having all this available, credit means that there’s the possibility of your using every dime of it to buy new, drapes carpet furniture and Annie the new widescreen HDTV at least that’s what the underwriter would take into consideration. When you’re looking for a Colorado Springs mortgage, Colorado Springs Mortgages even though you’d never charged that amount, your entire life, the simple fact that you could would make an underwriter afraid. So in this case it’s good advice. If you have all the couch you’re, not using cancel them out. So an underwriter won’t be tempted to make you close them out before you, your loan approval, and that’s not necessarily the case these days and the world of automated underwriting and credit scoring.

Remember that having strong available credit Factor can increase credit scores. If you have a ,000 credit line in various accounts and your balance is only out of the 5000, then you have an 80 % 80 % of your credit available to you that pushes up your score. But if you cancel some accounts, thereby reducing your available credit limit to say 8000 and you use 2/3 of your available credit twice as much as the magical, 30 % guideline, your credit score can suffer if you have cards that haven’t been used in a while leave Them alone and keep your available balance available credit at a higher amounts. This is good advice for looking for a Colorado Springs mortgage section. 6.5. How do I find out what my score is? That’S easy. Colorado Springs Mortgages It wasn’t too long ago that obtaining your own credit score was nearly impossible without applying for a mortgage loan. First, now it’s as simple as logging on to any other websites of the three repositories:, where you can go to a site called and get your credit score. This service pulls your credit from all 3 bureaus. The credit report is free, but you must pay a small fee for your score, as you would at the end of agile credit sites. The fair and accurate credit transaction act or facta is a law that allows you to get a free copy of your credit report. Every year, regardless of any credit declination and also let you see your credit score, it is important to find out what your is it important to find out what your credit score is. Yes, but it’s more important to review your credit report first, I know you’ve heard it this a million times, but the first thing to do is when getting ready to shop for a home is to check your credit report. The reasons not to see your score but see for errors check for errors that are hurting your score. Keep this in mind when you’re looking for a Colorado Springs mortgage section 6.6. Colorado Springs Mortgages How do I get a credit score by buying things on credit again, these computer models need a credit history of typically two years. I’Ve seen credit reports with no score available simply because the credit had been established or hadn’t been established. Long enough he’s got a gas station credit card and have it had only a few months you won’t have asked, or even if you’ve used the card but apply for credit using it and paying it back as it gets get your credit score established. You also need to have a Social Security number. This is good advice when looking for a Colorado Springs mortgage