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REALTOR® Emeritus |  | MORTGAGE BASICS | | ||
|  Keep the Transaction on Track Advanced Tip Advanced Tip Advanced Tip Broker Tip Getting to Close Advanced Tip Mortgage Basics Advanced Tip Advanced Tip Advanced Tip Inspections and Repairs Broker tip Closing Countdown Advanced Tip Going for the Close Advanced Tip Advanced Tip Advanced Tip Commission Disbursements Broker Tips Broker Tip Post-Closing Strategies Quiz: Contract to Close Bright Ideas: Contract to Close Code of Ethics: Contract to Close More Resources: Contract to Close | Understanding Credit Ratings Credit scoring uses data from any leading credit repository—Equifax, TransUnion, or Experian to measure the borrower’s default risk. Scoring involves measuring hundreds of variables. A credit score, known as the FICO score, is generated using a computer program designed to analyze credit data and measure a borrower’s default risk. According to myFICO, the FICO score reviews the following items in computing a score: 1. Payment patterns on various accounts, such as credit cards, retail accounts, installment loans, mortgage loans. 2. Number of existing credit accounts, including credit cards, consumer loans, car loans, etc. 3. Open or active accounts, their type, the length of time credit has been available, and credit levels. 4. Current indebtedness level and its relation to available credit. 5. Credit performance, including the number and severity of late payments. TIP: Paying a bills a few days after they are due won’t negatively impact your credit. Generally, payments have to be more than 30 days late before they are reported on a credit rating. 6. Number of recent inquires or attempts to get new credit, and time since these inquiries. Tips for Cleaner Credit If you have any doubts about prospective buyers’ potential borrowing ability, suggest they do the following before they start looking at homes. 1. Don’t let several different credit sources run credit checks for new accounts. (Lenders who see several recent credit checks are often concerned that borrowers may take on additional debt soon after the mortgage is signed.) 2. Keep balances low and payments current on credit cards. 3. Do pay off debt rather than moving it around. 4. Do review your credit report for errors. 5. Do re-establish your credit history by opening new credit accounts and managing them responsibly. 6. Don’t co-sign any loans or make any big purchase on credit between loan qualification and close. Adapted from "Improving Your FICO Score," www.myFICO.com 5 Steps for Rejected Borrowers > | |