08:30 – 5:00

Monday to Friday

5001 California Avenue, Suite 200

661-324-AGAPE

Your Bakersfield Mortgage Professional

December 13, 2017

08:30 – 5:00

Monday to Friday

5001 California Avenue, Suite 200

661-324-AGAPE

Your FICO Score

Scoring your Credit – How’s your FICO?

Because we live in an automated, it should come as no surprise that your creditworthiness boils down to a single number. All the years you’ve been paying your various bills: your mortgage, car payments, and credit card bills can be analyzed, diced, spindled and mutilated into a single indicator of whether you’re likely to meet your future obligations.

The three credit reporting agencies use slightly different formulas to build a credit score. The original FICO score was developed by Fair Isaac and Company. While Experian still calls its score “FICO”, TransUnion calls its score “Beacon” and Equifax uses “Empirica.” While the formulas vary from one agency to another, the differences aren’t huge; all of the agencies use the following factors to build a credit score:

  • Your Credit History – How long have you had credit?
  • History of Payments – Do you pay your bills on time?
  • Balances on your Credit Cards – How many credit card accounts do you hold, and how much do you owe on them?
  • Credit Inquiries – How many times have you had your credit checked for a loan?

Each of these factors is assigned a value and a weight. Each formula produces a single number which varies slightly from one agency to another. Credit scores can be as low as 300 and as high as 800. Higher scores are better. Typical home buyers will likely find their scores between 620 and 800.

FICO makes a huge difference in interest rates

Did you know? FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.

Improving your score

What can you do to raise your FICO score? Unfortunately, not much. Some companies promise quick fixes, but they can’t do anything different than what you can do — for free. You should remove any incorrect data from your credit report; this is really the only “quick fix” for credit problems.

Know your FICO

In order to improve your FICO score, you’ve got to have the reports that are used to build it. Of course, you need the score as well. Fair Isaac, the company that invented the first FICO score, offers scores on myFICO.com. It’s inexpensive, fast, and easy to get your credit score as well as reports from all three credit reporting agencies. They also provide helpful information and online tools that help you analyze what actions might have the greatest impact on your FICO score.

You can get a free credit report once per year from the three major agencies at AnnualCreditReport.com. These reports do not include a free credit score, but it’s very inexpensive to get one at the same time.

Now that you have all the facts, you will be a more informed consumer and you’ll be better positioned to get the right mortgage for you.

Curious about credit scores? Give us a call at 661.324.2427.

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