Showing posts with label Understanding Your Credit Score. Show all posts
Showing posts with label Understanding Your Credit Score. Show all posts

Thursday, August 13, 2020

A Few Ways Debt Affects Your Mortgage

If you are looking into financing a home at the Lake of the Ozarks, you’ve surely heard about how your credit score can impact your purchase. Many factors will play a role in your home buying endeavors, but one that you may not have thought about is your debt to income ratio. This one little aspect can play a huge role in your home-buying plans, so it makes sense to take a few moments to evaluate it. Here are a few things you may want to know about debt and mortgages and how they work together.

What is Your Debt-To-Income Ratio?

When determining what your debt to income ratio is, you can quickly do the math and come to your own conclusion. You will add up all of your monthly payments including credit cards, personal loans, and current mortgages. You can then divide that number by your gross monthly income. This resulting number is your debt to income ratio, and it will help your Missouri lender determine if you can afford another debt payment each month. An ideal debt to income ratio would be 25% or less, and if your debt to income ratio is above 43% you may need to wait a little longer to buy a home and spend some time paying off your current debt.

Unsecured & Secured Debt

Did you know that there are different types of debt? In fact, some can actually show that you are reliable while others may hurt your chances of securing your mortgage. The two main types are secured and unsecured. Here are a few details about these types of debts and why you may or may not want them.

Unsecured

Credit card debt is considered unsecured debt and can be detrimental to your scores if your current balance is more the 50% of your available credit limit. That means nothing is backing it, you can’t trade anything in or foreclose on it. It’s debt that is not secured to an item. Student loan debt is also considered unsecured, but it isn’t necessarily bad if you are consistently paying your bills on time. In many cases, student loans can even help raise your score. However, other loans like personal loans or credit card debt, even when paid on time, can still lower your score.

Secured Debt

Secured loans include auto loans, mortgages, or any loan that is balanced against something that could get taken away. There are some cases where auto loans can raise your credit score by diversifying the type of debts you have. Sometimes an auto loan can also be viewed more favorably than credit card debt because auto loans are harder to obtain than credit cards. Did you know that mortgage payments can also look good on your credit report? As long as they have been paid on time, that is. If you were ever late on a payment, that can look like a risk to a new lender.



If you're concerned with how your debt will affect your chances of obtaining a home loan at the Lake of the Ozarks, give us a call at 573-746-7211. We can discuss your questions and concerns, go over your financing options, offer competitive interest rates, and back it up with the first-class service you deserve. Together, we'll work towards getting you into that dream home of yours!

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




Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065






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



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Location: Osage Beach, MO, USA

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.  
  1. 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. 
  2. 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. 
  3. 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. 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. 
  5. 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 


Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

Direct: (573) 746-7211



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





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Location: Osage Beach, MO 65065, USA

Friday, April 7, 2017

Understanding Your FICO Score

When applying for a mortgage loan at the Lake of the Ozarks, the lender needs to determine how likely it is that you will make your payments. How does a lender do this? The FICO Score is the credit score most lenders use to determine your credit risk. In today's blog, your Lake of the Ozarks mortgage lender helps you understand what this number means.

What is a FICO Score? 


FICO Scores are the most widely used credit scores. They are a type of credit score created by the Fair Isaac Corporation. The Fair Isaac Corporation is a company specializing in "predictive analytics," meaning they take information and analyze it to predict what's likely to happen. While they do create credit scores, FICO itself is not a credit reporting agency. They use information provided by Equifax, Experian or TransUnion. The FICO Score, along with other details, is used to assess credit risk and help 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 650 indicate good credit, while those below 620 indicate bad credit. The score takes into account information from 5 different areas, each weighed differently:
  • 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 haven't been using credit very long, your score will be factored differently than those with a longer credit history. 

Understanding a FICO Score


The first thing a mortgage lender at the Lake of the Ozarks wants to know is whether or not you've paid past credit accounts on time. Next important is how much you currently owe. However, having credit accounts and owing money on them doesn't necessarily mean you are a high-risk borrower. The length of your credit history also plays an important role in establishing your FICO Score. 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's 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 of time represents greater risk. 

Your FICO Score is not only used to determine whether or not you'll be approved for a home loan at the Lake of the Ozarks, but also to determine what interest rate will be offered to you. If you are concerned about your FICO score and how it will affect your chances at a mortgage, talk to the best mortgage professional at the Lake of the Ozarks. I'm here to help you every step of the way, from your pre-approval all the way to closing on your dream home at the Lake! Give me a call at 573-746-7211.

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


Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

Direct:  (573) 746-7211

Email:  mlasson@fsbfinancial.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.









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Location: Osage Beach, MO 65065, USA
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