FICO Credit Score | Phoenix Arizona Real Estate Blog

Is Your Credit Score Scary?

The advent of common use of credit scores has become commonplace. One provider of these has become so dominant in this service that its name has become synonymous– Fair Isaac Company, “FICO”, was founded in 1956 by Bill Fair, an engineer, and another gentleman, Earl Isaac, a mathematician. Today, the FICO score ranks a potential buyer/borrower applicant according to the likelihood that they will default in the future, with higher credit scores indicative of lower risk and lower credit scores indicative of higher risk. FICO Bureau Scores range approximately from 375 to above 850.

“A plus” or Excellent Credit score of 720 and above will basically have a no ‘hit’ to interest rates on Conventional loans at this credit score tier. Borrowers with fico scores in this range will be approved with higher debt to income ratios as well.

“A” Good Credit Fico scores between 680 and 719 will get borrowers an interest rate of about .125% higher than 720+ in this range. 680 is also the cutoff for Private Mortgage Insurance at 95% on a conventional loan.

“So So” Credit Fico scores between 620 and 680 borrowers will need 10% down for Conventional (due to PMI rules) and will have a rate that is .375% to .75% higher. This tier is still very acceptable for FHA and VA so most borrowers will utilize those loan types.

Not Good Credit Fico scores between 580 and 620 borrowers on Conventional Loans require 20% down at this level (due to PMI rules). FHA and VA still have a chance in this range but strong income and assets are typically needed to overcome the lower fico scores.

Bad Credit Fico Score below 580 will make it tough and there is not much chance of getting a loan. This might be a good time to focus on credit repair.

Here are some great tips and credit pointers for starters:

Your credit score is a mix of Payment History, Length of Credit History, Amounts Owed, and New Credit/Inquiries, Types of Credit
Mortgage, Installment (Car Loans), and then Revolving (Credit Cards) are weight most heavily in that order.
Keep current balance at 35% or less than Maximum Credit Limit
30, 60, 90 day late’s are the killers. A 120 day mortgage late is consider a foreclosure.
Just because a divorce decree says the debt is not yours, you still take the hit when the ex-spouse does not pay and your name is still on the account.
Store credit cards create an inquiry on your credit and usually create an account that is close to being maxed out on the day it is created.
If you have a collection or a 30 day late, getting caught up will help, but your score will continue to be hurt because of the fact that it happened in the first place.
The only way to raise your credit score is to develop a positive history of using credit to outweigh the old, bad credit history.
Secured Credit Cards are a great way to develop positive credit history and do not allow you to get in over your head since you can only spend what you deposit in advance. www.bankrate.com is a good site to find the best cards on the market.
You are entitled to a free credit report from the 3 Credit Agencies one time per year. Phone: 1-877-322-8228 or website www.annualcreditreport.com (this is kind of cumbersome). This gives you an avenue to dispute and remove incorrect information. You have to pay to find out your score but this does not count as an inquiry.
Take 15 seconds and log on to www.optoutprescreen.com. You’ll no longer get “pre-approved” credit card and insurance offers becasue you are telling the 3 Credit Bureaus to quit selling your credit history.
Be very cautious about co-signing for anyone. If they miss a payment you take the hit 100% of the time – no questions asked.

Summary

Raising and maintaining a high credit score is pretty simple.. Get credit as required and don’t open credit for the sake of having credit. If you have credit, keep your balances as low as possible. If you do have a balance, make your payment on time.

If you do find yourself behind the eight ball, make it your mission to pick away at the debt to the best of your ability. If you are having problems, talk to your creditor or see a legitimate credit counselor.

If you are looking for information on buying Arizona Homes for Sale give me a call at (480) 202-3558 – It’s a great place to live, work and play! Arizona offers so many indoor and outdoor activities.