Your FICO Score

FICO-1-4The home buying process doesn’t start with getting pre-approved by a lender or with choosing a real estate agent. In reality, the home buying process begins with your finances. To realize your goal of owning a home, you must consider your FICO score along with the type of loan for which you’ll qualify in Irvine.

The Fair Isaac Company bases your FICO score on the summary of your total credit history. The score ranges from 300 to 850, with most people traditionally having a score of 650. In recent years, however, some borrowers have seen their score lowered after unemployment, closed credit card accounts, or credit card accounts that were closed because they don’t carry a balance. Some of the pieces in deciding your FICO score include:

  • Types of Credit — Do you have a healthy mix of loans and credit cards?
  • Payment History — Do you pay your bills on time ?
  • Credit to Debt Ratio — How much do you owe versus how much credit you have available?
  • Credit Inquiries — How many times has your credit history been accessed by someone other than you?

Lenders want to make sure that allowing you a loan isn’t a risk for them. Your FICO score gives lenders an insight into what type of borrower you’d be solely because of your credit history. Because of the shift in the economy, most home buyers should have scores in the range of 740 or higher to get a decent interest rate. If your score is less than that, you can still qualify for a loan, but the interest accumulated over time could be more than double the amount of someone with a superior credit score.

Getting your credit in order is the best way to ease into owning a home. Contact me and I can help you get on the right track to the home of your dreams.

You want a higher score, but how do you get it? Building your FICO score takes time. It can be difficult to make a significant change in your credit score with quick fixes, but your score can improve in a few years by keeping tabs your credit report and by using your credit wisely. The most important thing is to know your FICO score. Here are some methods to improve your credit score:

  • FICO-2-4Spread your debt around. At first, this doesn’t sound like a good idea. But, you steer clear of having one card that is at the limit and have your remaining cards at a zero balance. It’s better to have each of your cards at about less than 40% of their credit limit than to have the most of your debt taking up the balance a single card.
  • Retail cards and service station cards. For those who have non-existent credit or less-than-stellar credit, retail credit cards and gas credit cards are ways to get credit, increase your spending limits and keep up your payments, which will raise your FICO score. You should always avoid maintaining a high balance for too long because these types of cards normally have a surprisingly high interest rate.
  • Use your credit. Whether you have older cards, or are just getting started with credit, be sure to use your cards so that your accounts maintain an active status. But, pay them off in one or two payments.
  • Stay on top of payments. Late payments kill your FICO score. It’s where people who have recently been unemployed see the biggest dip in their credit score. Yes, it takes longer to build up your credit with payment history, but it’s the surest way to show that you’re responsible enough to make payments to a lender.
  • Ensure that your credit history is correct. If you find incorrect items on your credit report, contact the bureau requesting that the item be removed. If you have a common name or the same name as a family member, you’ll want to pay extra attention to make sure the activity reported is correct.

Knowing the methods you can use to improve your credit score, you can move toward becoming a homeowner. Remember that when it’s time to apply for a loan to purchase a home, you’ll want to keep your credit inquiries within a two-week window to avoid a negative mark on your credit score. With the help of Coldwell Banker Platinum Properties, shopping for a mortgage is sure to go more smoothly so you, too, can become a homeowner.

Learn more about FICO scores at www.myFICO.com, Fair Isaac’s informational site and you can review all of your credit reports for free each year at www.annualcreditreport.com. And, for a small payment, you can get your FICO score from each bureau on their websites: www.equifax.com, www.experian.com and www.transunion.com.

I work with all tiers of credit scores and can help you get back into home ownership with the best lending insitution for you. E-mail me at homes@sylviajonathan.com or call (714) 856-7003 for more information.

As your Buyer's Agent, I can help you find the perfect house for you, and as your Listing Agent, I'll get top dollar for your property. Call me, Irvine's real estate expert, at (714) 856-7003. I can help you make the decision that gets the outcome you want.

Email Me: Homes@SylviaJonathan.com
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