Credit Scores

What is a credit score?

Before deciding on what terms lenders will offer you on a loan (which they base on the “risk” to them), they want to know two things about you: your ability to pay back the loan and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.   The most widely used credit scoring models have a range between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. Credit scoring was developed as a way to consider only what was relevant to somebody’s willingness to repay a loan.

Different portions of your credit history are given different weights:

  • 35% of your score is based on your specific payment history.
  • 30% is your current level of indebtedness.
  • 15% is the time your open credit has been in use (ten year old accounts are good, six month old ones aren’t as good) and credit mix (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards).
  • 5% is the number of inquiries — credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, we may still be able to help. For borrowers with no credit score we simply need to establish that you have been paying 3 things on time for a year. Give us a call and we can help determine that.

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Buying and Financing Rental Property 2022 Event

July 2022 Lunch & Learn Event and Webinar for Realtors and Investors

Working with home buyers searching for a new primary residence is a totally different game compared to working with investors and rental property.  Sure, there are similarities, but what want-to-be home owners care about is different than what an investor cares about.  Frankly, for an investor, it’s all about the money and it should be.  When someone purchases a rental property they are essentially running a business.  If we can help them run a successful business and turn a profit they will likely come back and buy more properties.

There are lots of want-to-be investors out there and the hardest part is getting started.  We are going to help unravel the maze.  We will also look at long term planning.  Often just knowing what needs to happen to acquire the next property and the next one after that is one of the keys to success.  Owning rental property can be a great way to build wealth and we are here to help.

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