Credit Scores 101

In Depth Credit Information

Credit scores are becoming more important in the Real Estate and Mortgage industry today. The most typical credit scoring model used for mortgages is the FICO Score developed by Fair, Isaac:

Scores range from a low 350 to a high 850.

Scores are determined by the five main categories I have listed below:

• 35% is based on your payment history (including derogatory items)


• 30% is based on the amounts you owe creditors (especially revolving accounts with high balances)


• 15% is based on the length of time you have been utilizing credit (the longer-the better)


• 10% is based on whether you are applying for a lot of new credit (if you are loading up, it can hurt you)


• 10% is based on the 'mix' of credit (numerous finance companies may hurt you)

The data used to compile your scores is based on information creditors report to the three main credit bureaus:
Equifax, Transunion & Experian. It does not include information about income, race, sex or religion. There are some key factors to maintaining a healthy FICO score:

• Pay your bills on time! (even one late payment can do significant damage)


• Keep balances low on revolving accounts (debt more than 30% of your maximum credit limit can hurt you)


• Don't 'credit surf’ (frequent balance transfers may hurt you)


• Review your credit file at least once per year (this enables you to correct any errors or fraud)

If you feel something is being reported in error, contact the creditor in question and request an investigation. You may also dispute any item directly with the credit bureaus at the address below:

• EQUIFAX - P.O. Box 105873 Atlanta, GA 30348


• TRANSUNION - P.O. Box 1000 Chester, PA 19022


• EXPERIAN - P.O. Box 2104 Allen, TX 75013

If you do NOT want to receive solicitations in the mail from credit grantors, you may call the Direct Marketing List "OPT OUT' number @ (888) 567-8688. One call is valid for all three bureaus.

By following these tips, you should be on your way to
maintaining a healthy credit file!

In Depth Credit Information