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Visit AnnualCreditReport.com to get a FREE copy of your credit
report
In today's
increasingly automated society, it should come as no surprise
that when you apply for a mortgage, your ability to pay can be
reduced to a single number. All the years you've been paying
your mortgage, car payments, and credit card bills can be
analyzed, sliced, diced, spindled and mutilated into a single
indicator of whether you're likely to meet your future
obligations.
All three of
the major credit reporting agencies (Equifax, Experian and
TransUnion) use a slightly different system to arrive at a
score. The best known is called the FICO score, based on a
model developed by Fair Isaac and Company (hence the name) and
used by Experian. Equifax's model is called BEACON, while
TransUnion uses EMPIRICA. While each of the models considers a
range of data available in your credit report, the primary
factors are:
- Credit History
- How long have you had credit?
- Payment History
- Do you pay your bills on time?
- Credit Card
Balances - How much do you owe on how many accounts?
- Credit Inquiries - How many times have
you had your credit checked?
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Each of these,
and other items, are assigned a value and a weight. The
results are added up and distilled into a single number. FICO
scores range from 300 to 800, with higher being better.
Typical home buyers likely find their scores falling between
600 and 800.
FICO scores
are used for more than just determining whether or not you
qualify for a mortgage. Higher scores indicate you are a
better credit risk, and thus may qualify for a better mortgage
rate.
What can you
do about your FICO score? Unfortunately, not much. Since the
score is based on a lifetime of credit history, it is
difficult to make a significant change in the number with
quick fixes. The most important thing is to know your FICO
score and to ensure that your credit history is correct.
Conveniently, Fair Isaac has created a web site (www.myFICO.com) that let's you do just
that. For a reasonable fee, you can quickly get your FICO
score from all three reporting agencies, along with your
credit report. Also available is some helpful information and
tools that help you analyze what actions might have the
greatest impact on your FICO score. Each of the credit
services offers similar services on their web sites: www.equifax.com, www.experian.com, and www.transunion.com.
Armed with
this information, you will be a more informed consumer and
better positioned to obtain the most favorable mortgage
available to you.
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2005-2008 Texan Regal Mortgage LLC, All Rights
Reserved
Texas
Mortgage Broker License # 22771
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