CREDIT SCORES
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Scores range from a high of 850 to the low of 300. The higher the score the better the mortgage loan program and interest.
Credit scores are numeric values that rank the risk of default by an individual according to their credit history at a given point in time. Your score is based on your past payment history, the amount of credit you have outstanding, the amount of credit you have available, plus other factors.What do you think is the national average credit score?
A. 638
B. 658
C. 678
D. 698
Equifax, Experian, and Trans Union (The three most accessed national credit bureaus) collect credit information which is used by mortgage professionals to determine loan eligibility.
Past credit problems - late payments, repossessions, judgments, collection accounts, tax liens can stay on your credit report for up to 7 years and a Bankruptcy for up to 10 years. If deliquent credit is not paid or paid, but reported as still open, those items remain on the credit report until resolved.Weight factors used in calculating a FICO score.
- 35% on payment history
- 30% on amount owed
- 15% on length of credit history
- 10% on new credit
- 10% on types of credit
(source: Fair Isaac Corp)
Factors influencing your credit score
Payment history — Paying bills late, having bills sent to collection agencies, having foreclosures on home loans, having cars or other purchases repossessed or declaring bankruptcy.
Your credit limit — Keeping high balances on a number of credit accounts, especially when the debt is close to or over the credit limit.
Limited credit history — Having credit accounts for a short time or never having had a credit account or loan. It's better to have a few revolving credit accounts with low balances than 1 or 2 with balances that are close to your credit limit.
Many credit applications — Having too many recent applications for new accounts or loan.
Too Many Credit Accounts — Having too many credit cards or loans. Generally, experts recommend having no more than 3 or 4 credit cards. By checking your credit reports you can see if accounts are showing open that were actually paid off or closed a number of years ago. If you find this is the case, then write to the creditors involved and request they correct their reporting to reflect existing conditions.
Percentage of U.S. Consumers in each FICO range.
| 13% in 800 - 850 score range |
| 27% in 750 - 799 score range |
| 18% in 700 - 749 score range |
| 15% in 650 - 699 score range |
| 12% in 600 - 649 score range |
| 8% in 550 - 599 score range |
| 5% in 500 - 549 score range |
| 2% in 499 or less range |
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