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WHAT’S A FICO®?

What is a FICO® Score?

FICO® stands for Fair Isaac & Company and is the name for the most well known credit scoring system, used by Experian. The credit bureau’s computer evaluates a complete credit profile and assigns a score, which is used to estimate credit worthiness. Each of the three bureaus (Experian, Trans Union, Equifax) employs its own scoring system, so a given person will usually have 3 separate scores. Someone with a higher score will be viewed as a better risk than someone with a lower score. Typically, scores will range from about 600 to 700 or above, although some cases will be outside this range.

What Kind of Score Do I Need for a Home Loan?

There are as many answers to this question as there are loan programs available. Most lenders will take the average of all 3 scores to evaluate an application. Niche loans, such as Easy Qualifier and low down payment loans will have higher FICO® requirements.

How is My Score Determined?

The FICO® model has 5 main elements:

  1. Past payment history (about 35% of score) The fewer the late payments the better. Recent late payments will have a much greater impact than a very old Bankruptcy with perfect credit since.
    Myth - paying off cards with recent late payments will fix things. Payoffs do not affect payment history.
  2. Credit use (about 30% of score) Low balances across several cards is better than the same balance concentrated on a few cards used closer to maximums. Too many cards can bring down the score, but closing accounts can often do more harm than good if the entire profile is not considered. BE CAREFUL WHEN CLOSING ACCOUNTS!
  3. Length of credit history (15% of score) The longer accounts have been open the better for the score. Opening new accounts and closing seasoned accounts can bring down a score a great deal.
  4. Types of credit used (10% of score) Finance company accounts score lower than bank or department store accounts.
  5. Inquiries (10% of score) Multiple inquiries can be a risk if several cards are applied for or other accounts are close to maxed out. Multiple mortgage or car inquiries within a 14 day period are counted as one inquiry.

How Can I Raise My Score

Your score can only be changed by the way that item is reported directly to the credit bureaus (Experian, TU, Equifax). Written confirmation from the creditor is required. It is best to make these corrections before you try to purchase a home, because you can never be sure the exact impact a change will have on your score.

What Does This Mean to Me?

You should have your credit reviewed BEFORE you look for a home, and work with a PROFESSIONAL loan officer to make sure your loan is based on the most accurate information.

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Thank you for visiting today. If this is your first visit, take your time and look around. I have plenty of information and resources available to you. If you are a return visitor, thank you. I would love to hear from you and tell you how I can serve all your real estate needs.

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Curtis and Patricia Sheets
16503 Booker T Washington Hwy
Moneta, VA 24121
Phone: (540) 293-1033
Fax: (888) 629-1611
Email:
Curtis@LoveToSellYourHome.com
Patricia@LoveToSellYourHome.com

Testimonials

Curtis and Pat are very courtious and professional. You'll get top of the line service and they will go out of their way to make sure you're satisfied. They treat you like family and stay in touch. We couldn't have asked for better realtors or friends! Tara Davidson Fain
We would like to take this opportunity to thank you for helping us find a great home to live in. We first spoke to you two years ago. At that time, you knew that we were not yet ready to purchase a home or to move. Still, you showed us a few houses. You also took the time to show us some of the highlights of the area, such as the Roanoke Star and the Market District. Over the following two years, you always kept in touch. You sent us nearly 350 houses to review and personal notes about how we were. When we sold our house in NYC and came down to Roanoke, you took us around again and we found a dream house. We still had business to finish in NYC and you took charge, getting an inspection of the home and arranging for a closing agent to handle the purchase. Thank you for finding just the right home and for treating us as friends, not as customers. If any of our friends wants to make a move out here, we would recommend you and ReMax without reservation. Alfred and Clara Rodney
We bought our house with Patricia & Curtis. They were very knowledgeable, fair and honest and very helpful. We would highly recommend them to anyone looking to buy or sell real estate. It was a pleasure to visit houses with them. Jean-Luc and Regine Willem
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Thank you for visiting today. If this is your first visit, take your time and look around. I have plenty of information and resources available to you. If you are a return visitor, thank you. I would love to hear from you and tell you how I can serve all your real estate needs.

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