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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.

Latest Blog Post

February Education Series for Realtors: All Things Interest Rate

Rates:  How they work. What affects them. How to sell using rates in today’s market.

Rates have been a hot topic for the last few years.  As they plummeted into the low 3’s when COVID hit and then essentially double in 2022 when the country experienced huge inflation numbers.  This will not be a boring presentation about rates.  We are going to touch on what’s going on overall with rates. However, the main purpose of this event is to show you how a rate is determined for an induvial buyer.  We will talk about things buyers can do to help improve the rate they are being offered.  We will talk about programs that have very attractive rates and discuss things sellers can do to help lower the rate for a buyer.  A lower rate equals more buying power for a home buyer and everything we cover will help agents sell more homes in 2023.    The market is back to normal and it’s still a great time to buy.

Hot Topics We Will Cover

Here is a list of some of the things we will cover during the event:

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