Your Lake of the Ozarks Mortgage Lender: FICO Score

Tuesday, April 7, 2020

Quick Tips For Understanding Your FICO Score

When the time comes to apply for a mortgage at the Lake of the Ozarks, your lender will need to determine the likelihood of you making your payments. Lenders use the FICO Score (credit score) to determine your credit risk. Today we are going to talk about how your Lake of the Ozarks mortgage lender can help you understand what this number means, and how it affects your home buying capabilities.

What is a FICO Score?

FICO Scores are the most widely used credit scores. This type of credit score was created by the Fair Isaac Corporation, which specializes in “predictive analytics.” Predictive Analytics means that they take information and analyze it to predict what is likely to happen. They also create credit scores, but FICO itself is not a credit reporting agency. They will use the information provided by Equifax, Experian, or TransUnion. In the end, the FICO Score, along with other details, will be used to assess credit risk and help your lenders determine whether or not to extend credit.

How is a FICO Score Determined

FICO Scores range from 300 to 850. In general, scores above 660 indicate good credit, while those below 620 indicate not so good credit. The score takes into account information from 5 different areas, each carrying a different weight in the equation:
Payment History - 35%
Current Level of Indebtedness - 30%
Types of Credit Used - 10%
Length of Credit History - 15%
New Credit Accounts - 10%

The importance of any one of these factors is also determined by the overall information on your credit report. For example, if you have not been using credit very long, your score will be factored differently than those with a longer credit history.

Understanding a FICO Score

One of the first things that a mortgage lender will want to know is whether or not you have paid past credit accounts on time. The next important point is how much you currently owe (your debt to income ratio). One good thing to remember is that having credit accounts and owing money on them does not necessarily mean that you are a high-risk borrower. Another aspect that plays into your FICO Score is the length of your credit history. In general, a longer credit history will increase your FICO Score. Your credit history takes into account how long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average of all your accounts. Credit history also looks at how long specific accounts have been established and how long it has been since you used certain accounts. The next step is to look at what types of credit you have, including credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. New credit accounts will also come into play. Research shows that opening several credit card accounts in a short period represents a greater risk. Collections, past-due accounts, late payments and charged off accounts have a negative impact on your score and can significantly decrease it.

Buying a Home at the Lake of the Ozarks

Your FICO Score is not only used to determine whether or not you will be approved for a home loan at the Lake of the Ozarks but will also determine what interest rate will be offered to you. If you have questions about your credit score and how it affects your plans to purchase a home at the Lake of the Ozarks, let us know! You can fill out an application on our website at www.yourlakeloan.com as well as contact us directly to learn more. We look forward to helping you with this next step in your life!

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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.

Friday, May 30, 2014

Credit Scores that Lenders Use

Your credit score is a number that influences the amount of credit that is available to you. When it comes to taking out a loan, your credit score is a vital factor in the terms your Lake of the Ozarks mortgage lender will offer you. When you apply for credit, whether it be a credit card, car loan or home loan at the Lake of the Ozarks, lenders want to know the risk they will be taking by loaning money to you. A credit score is a number that summarizes your credit risk and helps the lender evaluate your credit report. "FICO Scores" are the most commonly used credit scores among lenders. Beware of those companies offering you a free credit score online because the majority of them are not true FICO scores and can vary a lot.

FICO Scores

The most widely used credit score is one created by Fair Isaac Corporation. Lenders use this score to help them make billions of credit decisions each and every year. The FICO score is based solely on information in consumer credit reports maintained at the credit reporting agencies. These scores range from 300 to 850 and is calculated by a mathematical equation that evaluates many types of information from your credit report. By comparing this number to the patterns of hundreds of thousands of past credit reports, the FICO Score is able to estimate your level of future credit risk.

For more information on understanding FICO Scores visit: http://www.myfico.com

What Makes a Good FICO Score

When it comes to the FICO Score, the higher the score, the lower the risk. However, no single score can tell you whether a specific candidate will be a "good" or "bad" customer. While many mortgage lenders at the Lake of the Ozarks use the FICO score to help them make a lending decision, each lender has their own strategy. There is no single "cutoff" score number that says you will or won't get a loan. Many other factors go into determining your actual interest rates. Along with your credit score, the credit reporting agency will provide up to five reasons of why your score is what it is.

For information on how to improve your FICO Score visit: http://www.myfico.com

Calculating FICO Scores

In order to calculate your FICO Score, there has to be enough information regarding your credit. Generally, you must have at least one credit account that has been open for at least six months and at least one account that has some recent activity (within the last six months) that's been reported to the agency. You will actually have 3 different FICO Scores, one for each of the credit bureaus: Equifax, TransUnion and Experian. Each score is based on the information that the respective bureau has for you, meaning that each of these numbers can differ. As your credit information changes over the years, so will your current credit score. Therefore the FICO Score you got a month ago is probably not the same score a lender would get from the credit reporting agency today.

For more information on how credit scores can change visit: http://www.myfico.com

Although the FICO Score is an important factor when determining your Lake of the Ozarks interest rates, lenders will not base their decision on this number solely. If you have more questions on your credit score or about qualifying for a mortgage loan at the Lake of the Ozarks, give Michael Lasson a call at 573-746-7211. When it comes to your financing needs, he's committed to working with you every step of the way!

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