Your Lake of the Ozarks Mortgage Lender: Credit Score Factors

Wednesday, February 5, 2020

Fun Facts About Credit Scores

Your credit score can have a huge impact on your purchasing choices, but can often feel confusing and even frustrating. Credit scores are a common topic in the mortgage industry, so we wanted to take a few moments and maybe help answer some questions. Whether you have a great credit score and would not have any trouble getting a Lake of the Ozarks mortgage, or you may have some issues that need to be addressed to help improve your numbers - there are always interesting things to learn.

Five Core Factors Make Up Your Credit Score

Your FICO score is made up of five factors, and different percentages make up each criterion. When applying for credit, these factors are important. The five factors that impact your credit are:

Diversification of Credit
Inquiries & New Credit
Credit History Length
Credit Utilization
Payment History

Credit Reports and Credit Scores are Different

A credit report will list every piece of your financial history that affects your creditworthiness. This can be helpful when you want to review your credit history and find the inaccuracies, fraud, or just general curiosity. Your credit score is the numerical grade of your creditworthiness. The purpose of checking your credit score is to get a quick snapshot of your score, giving you the knowledge of where you stand before you start house hunting at the Lake of the Ozarks.

Negative Credit Items Are Not Negative Forever

Did you know that most negative items will remain on your report for seven years at the most? This is due to the regulations set by the Fair Credit Reporting Act. However, bankruptcy can last up to 10 years or more in some cases.

FICO Credit Scores Can Range from 300 to 850

A credit score can range depending on the credit bureau, but knowing your score can help you understand what needs to be done to improve it. A “good” score ranges from 680 to 739, anything below that could be “poor” or “fair”, and anything above it could be “very good” or “exceptional”. There are things you can do to improve your score, so knowing where you sit can tell you how much you need to do to get to your next goal.

FICO Scores Are Important and Used By Many Lenders

The FICO credit scoring system was founded in 1956 by Bill Fair and Earl Isaac. The purpose behind it was to help lenders make well-informed lending decisions. FICO analyzes scores from the three major bureaus: TransUnion, Equifax, and Experian. In fact, 90% of lenders use your FICO score when making their lending decisions.

You Have Several Credit Scores

Did you know that your credit score can vary based on the credit bureau reporting them? The major bureaus all have slightly different information regarding credit history. It seems confusing, but there are also different scores specific to particular industries. An example would be that auto lenders review different risk factors than mortgage lenders, so the scores that each lender receives can vary. Some of the factors that affect your credit score could be the entities that report your credit, the time that the score was reported, the scoring model that is used, and the type of credit you are applying for.

True or False: Checking Your Own Score Will Hurt Your Credit

False! There is a myth running around that if you check your credit score or order a credit report, that you will hurt your credit. Those “soft” inquiries should not affect your credit. Hard inquiries, like when a lender looks at your credit can negatively impact your score. Just remember that the consequences are not strong, and they are temporary.

When it comes time to secure a mortgage at the Lake of the Ozarks, your credit score is an important factor. There are several programs available to help borrowers better their credit score. A solid credit score lends to more financing options when preparing to buy a home. For more information on how your Lake of the Ozarks mortgage lender can help you purchase your dream home, give me a call at 573-746-7211.

For Lake area news, resources and tips on financial services, please

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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

Wednesday, April 11, 2018

Breaking Down Your Credit Score

Your credit score can impact a variety of things in your life, including homeownership. Your credit score and credit history is a large determining factor for mortgage approval. Some people may have no clue what their credit scores, while other know what their score is, but don't really understand how that number was determined. In today's blog, your Lake of the Ozarks mortgage lender breaks down the "credit score" according to the FICO model.

Credit Score Factors

Your credit score is determined by 5 factors of differing importance. These include payment history, amounts owed, length of history, new credit and types of credit used.

Payment History - 35% - Your payment history is based on how often you pay your accounts on time. Late payments can lead to a lower credit score.
Amounts Owed - 30% - How much debt do you have, and how does that compare to your total credit used? Less is more in this case. Using more than 20% of your credit limit may lower your credit score. Lowering your debt can be the key to a better credit score.
Length of History - 15% - When did you first establish credit? The length that you've had a credit history is also a factor. A longer credit history of responsible credit use will likely lead to a higher credit score.
4. New Credit - 10% - Opening several new credit accounts in a short period of time can lower your credit score. It's very important that during the mortgage process you don't open any new credit accounts.
Types of Credit Used - 10% - Credit comes in many different forms, from credit cards to auto loans, etc. Having experience with different types of credit can help your score.

Credit Score Facts

When it comes to understanding your credit score, a lot of people have no idea what their score is, how it's determined or what that means for them. Check out some of these fun facts revolving around credit scores in general.

45% of college students don't know what their credit score is.
Over 1/3 of American adults admit they don't know their credit score.
18 years is the average consumer's oldest open credit line.
52% of adults in America haven't viewed their credit score in the past year.
The average American has 13 credit accounts showing on their credit report, including nine credit cards and four installment loans.
699 is the average National Credit Score.
Most Americans use less than 30% of their available credit limits. Only 1 in 6 uses 80% or more.
Maxing out credit cards damages credit scores by 10 to 45 points.
43% of women, compared to 32% of men, said it was important to know a partner's credit score before getting seriously involved.
About half of Americans don't have a single late payment on their credit reports.
More than 8 million people fall victim to identity theft in the U.S. each year.
Over 144 million people haven't looked at their credit report in the last year.

As your mortgage professional at the Lake of the Ozarks, I'm here to work with you every step of the way during the mortgage process. That starts with advice on fixing your credit if needed. We will discuss your Lake of the Ozarks home financing options and determine the best way to move forward with your particular situation. Give me a call at 573-746-7211 to get started today.

For Lake area news, resources and tips on financial services, please