WHAT’S A FICO®? What Is A FICO® Score?

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FICO® stands for Fair Isaac & Company and is the name for the most well known credit scoring system, used by Experian. The credit bureau’s computer evaluates a complete credit profile and assigns a score, which is used to estimate credit worthiness. Each of the three bureaus (Experian, Trans Union, Equifax) employs its own scoring system, so a given person will usually have 3 separate scores. Someone with a higher score will be viewed as a better risk than someone with a lower score. Typically, scores will range from about 600 to 700 or above, although some cases will be outside this range.

What Kind Of Score Do I Need For A Home Loan?

There are as many answers to this question as there are loan programs available. Most lenders will take the average of all 3 scores to evaluate an application. Niche loans, such as Easy Qualifier and low down payment loans will have higher FICO® requirements.

How Is My Score Determined?

The FICO® model has 5 main elements:

  1. Past payment history (about 35% of score) The fewer the late payments the better. Recent late payments will have a much greater impact than a very old Bankruptcy with perfect credit since.
    Myth - paying off cards with recent late payments will fix things. Payoffs do not affect payment history.
  2. Credit use (about 30% of score) Low balances across several cards is better than the same balance concentrated on a few cards used closer to maximums. Too many cards can bring down the score, but closing accounts can often do more harm than good if the entire profile is not considered. BE CAREFUL WHEN CLOSING ACCOUNTS!
  3. Length of credit history (15% of score) The longer accounts have been open the better for the score. Opening new accounts and closing seasoned accounts can bring down a score a great deal.
  4. Types of credit used (10% of score) Finance company accounts score lower than bank or department store accounts.
  5. Inquiries (10% of score) Multiple inquiries can be a risk if several cards are applied for or other accounts are close to maxed out. Multiple mortgage or car inquiries within a 14 day period are counted as one inquiry.

How Can I Raise My Score

Your score can only be changed by the way that item is reported directly to the credit bureaus (Experian, TU, Equifax). Written confirmation from the creditor is required. It is best to make these corrections before you try to purchase a home, because you can never be sure the exact impact a change will have on your score.

What Does This Mean To Me?

You should have your credit reviewed BEFORE you look for a home, and work with a PROFESSIONAL loan officer to make sure your loan is based on the most accurate information.

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Do you want to preview the interior of a home? Or do you want disclosures or inspections on a property, give me a call at 510-684-1455. I am here to assist you when you need me.

 
 

Testimonials about Leah

Hiring Leah to be our realtor was the best decision we made when we sold our home in Oakland. We moved to Illinois for my work, and our relocation company required us to interview multiple realtors, all from the Oakland/Berkeley area. Leah was the first agent we interviewed, and while we completed our interviews with the other realtors, we knew right away that Leah was going to be our favorite. When Leah arrived at our house, she was full of enthusiasm and friendliness. She started off by making very positive comments about our location, the view, and her overall first impressions. Her opinions on how our location compared to different neighborhoods in the area meshed with our thinking exactly. Then she had us walk through the house, where she paid attention to every inch of every floor and walls and fixtures, asking lots of questions and taking notes and photos. After giving her the tour we sat down and Leah told us she thought our house could sell for just over 700K, and showed us the comps and discussed the trends that supported her position. She explained why certain lower comps were not applicable based on her research of those sales, and why buyers who had been in the hunt for a while (it's a seller's market in Oakland) would understand why our home had more value. She explained that she didn't think we needed to do any major repairs or upgrades, as they wouldn't increase the price of our home nearly as much as the investment we would have to put in. We left very impressed and excited (we had purchased the house a few years before for a much lower price and had expected it needed a lot of repairs). The other realtors we interviewed over the following week didn't show as much interest in our house, paid minimal attention to the details, and suggested that a lot of work was needed if we were going to get over 600k for the house. They used the comps that Leah had discounted, and scoffed at the idea that houses in the next neighborhood over would be comparable to ours. We agonized over the decision for a while. We liked Leah, we knew she would give 100% to sell our house, but what if it really wasn't worth as much as she thought? We reviewed the sales plans of each realtor, and in the end we came to the conclusion that we trusted Leah over the others, and even if she was wrong on the starting price, she would present out house in the best possible light because she understood it's value. But our fears were unfounded, Leah turned out to be completely right and worked harder than we had hoped to prove our trust was well-placed. Leah held 5 open houses and a realtor tour in 3 weeks before opening up for offers. She had a handyman make minor touches (fence repair, painting our mailbox) and paid for those repairs herself. She coordinated the cleaning, the carpet washing, the staging (she met with multiple stagers before choosing the one she felt fit our house right). While we focused on our new life in Chicago, she was back in Oakland meeting with 4 appraisers, 2 home inspectors, a termite inspector, a mold inspector, and coming to the house dozens of times to interview contractors for bids for termite work and mold remediation, and to inspect their work for thoroughness afterwards. She advised on us which contractors seemed the most professional, who was overcharging us, and made herself available whenever we scheduled a new one out for a competitive quote. When our buyer tried to get a discount after the first appraisal, she proved herself a shrewd negotiator and was able to work with the buyer's agent to avoid a significant price reduction. When our company-appointed relocation agent was slowing down the process, Leah set her straight so we could keep the deal moving. We sold our house for $705k. The other agents we had interviewed told us we'd need to do a lot of upgrades to even sell between 600 and 650, but Leah insisted our house was worth at least 700. We believed she was right. And she was right. I know the other agents would not have gotten us such a high price, and would not have showcased our best features like Leah did. Overall, I would definitely recommend Leah for anyone looking to sell their home. She puts your needs first, and will work tirelessly and enthusiastically to make sure you are happy. We used a relocation company who referred Leah (and the other realtors) to us but Leah made it clear that she worked for us, not for them. When the relocation company dragged out the process, Leah was positive, helpful, and remained enthusiastic, and we knew she had us covered. I really cannot express enough the gratitude my wife and I feel towards Leah, who took care of us so well and gave so much of her time and her own resources so that we would have the best experience and get highest sales price possible. Hire Leah. Justin R.
Thank you for lowering your fees to get our offer accepted. Thank you for paying for the home inspection and termite inspection to get it done quickly. Thank you for understanding that my deposit should not be put at risk if I don't feel comfortable. Every time I called with lender complaints you where there for me and got on the phone and straightened it out for me. You explained documents when lenders could not help me understand. You were the best buffer I have experienced. I trust you like family. I will use you again when it's time to buy or sell. Thank you so much. A.Wouldo, Buyer
Lady, you are amazing. Sold my house and pushed for more than what those agents wanted to give. Helped me clean and organize. Dropped stuff off for me and pushed those vendors to do what they said they would. It was fun and I love my new house you helped me by way out of your service area so I did not have to look for another agent. You knew what I wanted and we got it done. Your family now and forever. W. Terry Seller/Buyer
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