About Your Credit Score

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Before deciding on what terms they will offer you a loan, lenders must discover two things about you: whether you can pay back the loan, and if you will pay it back. To understand whether you can pay back the loan, they assess your income and debt ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company formulated the original FICO score to help lenders assess creditworthiness. For details on FICO, read more here.



What is a credit score?  It is a number that helps banks and other financial institutions calculate the risks of somebody repaying a loan.

The higher the score, the less risk of default.*

It is a financial model that takes into account many factors in order to develop a credit score.  There are 3 credit repositories (Experian, Equifax, Transunion) that collect the data from creditors and maintain your scores.  The scores will usually be different at each repository due to the various information each one has reported to them.

Tips for raising the score:     Pay bills on time, (especially mortgage pmts)

Keep balances low on credit cards (Usually less than 50% of limit)

Pay off debt rather than moving it around.

Do not open a lot of new accounts rapidly.

Do not close unused credit cards as a strategy to raise your score.

*Credit Scores and Odds of a Delinquent Account:
585: 2.25 to 1   615: 9 to 1   645: 36 to 1   680: 144 to 1    780: 576 to 1


Payment history     = 35%

Amounts owed        = 30%

Length of history   = 15%

New credit pursuit = 10%

Credit mix              = 10%


Basic Pre-Approval

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