Credit bureau score - A number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.
There are 5 factors that impact your credit score:
1) Payment History
2) Outstanding Credit Balances
3) Credit History
4) Type of Credit
5) Inquiries
Credit scoring has been utilized by lenders for over 30 years. Credit scoring is a technology used by credit grantors to qualify the risk associated with extending credit to a given borrower. Risk is quantified by means of a score card which calculates a numeric value, or score, for a credit applicant a lender wants to evaluate. Score calculation is done based on information that has been determined to be indicative of future credit performance. There are many types of scoring methods currently utilized today including credit scoring, applicant scoring, behavioral scoring and several others. The type most relevant to the mortgage industry is credit scoring and among the most widely recognized is the FICO SCORE.
A value (score) is assigned base on the following criteria, in the order of their weight in the scoring formula, payment history, outstanding balances in relation to credit limits, length of credit history, number of inquiries, and the type of accounts.
There are three major credit bureaus that lenders use to "pull" your credit.
These companies are:
. Experian (Formerly TRW)
. TransUnion
. Equifax
Each of these companies maintains a separate credit report on you based off information gathered from your creditors. Depending on who your lenders are and which Credit Bureau's they report to, if not all three, will determine the differences in your credit report from each company. At a bare minimum you need to order a report from one of these companies directly or through an intermediary. The best thing you could do is order a Tri-Merge report. This report is one that merges the information from all three Bureau's into one report so you can see the information that all three credit providers are reporting about you. Mortgage Professional will have access to this report for a reduced fee.
In order for these accounts to be added to your credit report you must actually use the newly issued card at least once to activate it. It usually takes about 90 days for these type of accounts to be reported on your credit report.
The scoring model will differ depending on whether you're applying for a mortgage, credit card, auto loan, or insurance.
Credit scores you get from companies that advertise online many times are in fact not the actual score your Loan Officer will see. These scores are not based on the same scoring models that are used when have your credit pulled by your Loan Officer for the purpose of a mortgage loan.
FICO scores generally range between 300 and 900.
Scores are based on a person's whole credit picture. No one factor determines a score. A credit score is a composite of both positive and negative information such as missed payments or bankruptcies (if any) as well as accounts paid satisfactorily. That said, several areas of the credit bureau report carry the most weight in a credit score.
You might consider getting added as an authorized user on a credit card account that has excellent payment history is over 3 years old and has a high credit limit with a low balance. This could increase your credit scores by as much as 20 points per account.
Slight variations in your credit score can have a dramatic effect on the rate you can recieve on a home mortgage.
Always review your credit to be sure it is correct.
Free Credit reports advertised never give you a detailed information. It gives you just the accounts open and their balances. They dont give you scores. A free report is not always the best representation of your credit. You should cosultant with a mortgage counsler to get a more detailed view.
Most lenders obtain scores from three sources and use the middle score to base your qualification.
No more than 7 inquires will be used to calculate the score. Multiple inquires within 14 days, will be counted as a single inquiry. This applies to auto inquiries and and mortgage inquiries. Being late on your mortgage is no worse than being late on your credit card. A 60 day or more late is significantly more damaging than a 30-day late. In most cases an unpaid collection is just as bad as a paid collection.
Credit scoring is a scientific method that uses statistical models to assess an individual's credit worthiness based on their credit history and current credit accounts. Credit scoring was first developed in the 1950s, but has come into increasing use in the last two decades.
Your credit score can play a vital role when lenders decide to extend you a loan. Over 75% of mortgage lenders and nearly 100% of subprime lenders review your current credit scores when making lending decisions, and depending on your score they may offer you a different rate or term then they would otherwise.
I can understand how your credit score can be confusing. I want to thank you for reading the information above. If you would like to continue this conversation than please contact me so you and I can discuss your financial situation. Please read more valuable information and when you feel comfortable I would like you to contact me.
Biggest single factor to credit score is your mortgage. Having one mortgage late is a red flag.
By keeping all of your revolving credit balances below 50%, you will get a higher score. Below 30% is even better
Yes, mortgage accounts are looked at big time. FICO scores are most effected by lates on mortgages than lates on credit cards. They figure, if you cannot be financially responsible enough to pay for your house (the roof over your head) then you are not financially responsible at all. I've seen 100 points be taken away from a single 30 day late on a mortgage.
Sometimes credit bureaus can report inaccurate information about you. It is important to resolve these issues since they may hurt you in the loan process. You should talk with your broker about any inaccurate information or contact the three major credit bureaus.
Equifax Credit Bureau
P.O. Box 740241
Atlanta GA 30374-0241
(800) 685-1111
http://www.equifax.com
Experian (Formerly TRW Credit Bureau)
P.O. Box 949
Allen TX 75013-0949
(888) 397-3742
http://www.experian.com
Trans Union Corporation (Credit Bureau)
Consumer Disclosure Center
P.O. Box 390
Springfield PA 19064-0390
(800) 916-8800
(800) 682-7654
(714) 680-7292
It is important to check your credit report annually for errors or potential fraud. If you suspect errors, immediately contact the three credit reporting agencies. If you believe there is wrong information, you should be prepared to provide documentation to the agencies so that they can clear it up.
If there is incorrect information on your credit report such as a payment that was reported late that should not have we will be able to correct the information within 3-5 days by going directly through the 3 major credit bureaus and get a rescore to reflect what your credit score should be.
It might be worth taking a look at your credit report to see just what potential lenders are going to find on your report. In fact, you are entitled to a free credit report within 60 days if a lender has denied you credit based on their review of your credit report.
