Credit Help for Real Estate Financing: Credit Scores
When you buy real estate, lenders run all of the "big three" credit bureau reports. Each credit reporting agency lists your credit history as supplied to them by the individual lenders and includes governmental records. Each report assigns a credit score number to you. The credit scores reflect your theoretical risk of default to the lending institutions.
Software developed by Fair Isaac and Company generates your "FICO score." Experian uses a system called Fair Isaac Risk Model, a computer program which rates you with a score according to Experian's information. Equifax bases scores on BEACON programs and TransUnion bases scores on EMPIRICA models.
Your Baseline
You have three credit scores, often called FICO scores, one from each credit bureau. The lender takes the middle score as your baseline. Lenders have different standards, but generally a "C" score is around 500 to 600, a "B" is around 600 to 680, and an "A-" is above 680. Over 700 is the magical number that gets you the attention you desire. If your score is under 500, find someone to privately finance for you or a partner with good credit while you work on improving your score.
How Lenders Rate You
Credit score Available mortgage financing
720 - 800 Superb! You get what you want
700 - 719 Wonderful! You get top rates & terms
680 - 699 Good! You get good rates & terms
660 - 679 All right. You pay higher costs & rates
640 - 659 Okay score if good income
620 - 639 Weak. You need good income & some money
600 - 619 Poor. Use creative loan broker & pay more loan costs
580 - 599 Almost impossible without large down payment
Under 580 Work on fixing credit without delay
What Does Not Count In Your Credit Score
The scoring model doesn't compute:
Age & gender
Race
Whether you own a home or rent
Length of time at your current address
Job or length of employment at your job
Income
Education
Marital status
Whether or not you've been turned down for credit.
Real estate lenders don't just consider your credit score when you apply for mortgage financing. Understanding your credit score helps you with this one part of your mortgage requirements.
Copyright © 2005 Jeanette J. Fisher - All Rights Reserved.
Professor Jeanette Fisher, author of "Credit Help! Get the Credit You Need to Buy Real Estate," "Doghouse to Dollhouse for Dollars," and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, and newsletters, see http://www.recredithelp.com/
MORE RESOURCES:
 Reuters | Washington Mutual stock down on credit concerns Reuters - Citing the thrift's financial statements for the period ending June 30, Gimme Credit analyst Kathleen Shanley wrote that "many creditors have quietly been ... WaMu Drops Second Day as Gimme Credit Cites Liquidity Concern UPDATE: WaMu's Stock Down As Investor Confidence Drains WaMu spokesman: no need to rely on outside funding sources |
FCStone Group increases size of credit facilities Forbes, NY - AP 07.24.08, 3:55 PM ET FCStone Group Inc., a commodity risk management firm, said Thursday it has reached deals to increase the size of its credit ... FCStone increases credit lines Kansas City Business Journal FCStone Group, Inc. Announces Syndicated Margin Call Credit ... |
Cicero gas station reports attempt to disrupt credit card system Chicago Tribune, United States - An operator of a Cicero gas station called police Tuesday after finding that two men had climbed the roof of the business to cover up a credit card ... Rooftop gas theft scheme foiled |
 Sify | Unsolicited credit card is no more your headache Sify, India - Had a bad credit card experience? Help is at hand. On Thursday, the Reserve Bank of India cracked the whip on credit card issuers by setting out some ... Credit cards get RBI boost RBI warns banks on credit card interest charges Stop excessive credit card charges: RBI |
 Wall Street Journal Blogs | Extra! Extra! Credit Concerns at New York Times! Wall Street Journal Blogs, NY - The NYT front page does not include a story about its credit default swaps. (nytimes.com) Shares of New York Times Co. are down 4%, but the newspaper ... Extra, Extra: New York Times (NYT) About To Get Downgraded To "Junk" |
Executive says bank has more than enough capital to endure credit ... MarketWatch - The company has been one of the harder-hit banks during the credit storm, but analysts said it has effectively boosted its capital reserves to protect ... |
 Gulf Times | Asian Stocks Fall on Credit Concern; National Australia Slumps Bloomberg - ``Investors are out there thinking everything's fine and another bank comes out and increases its provision for credit-related losses. ... Asian Stocks Fall Most in Six Weeks on Credit, Profit Concerns Asian Stocks Fall on Credit Concern; National Australia Slumps Asian Stocks Gain for Fourth Day on Easing Oil, Credit Concerns |
Credit cards Superprime slime Economist, UK - As the credit boom reached its peak, the firm’s credit-card business was growing by a dizzying 20% or more a year, with younger consumers with scant track ... |
Shaw's Credit Ratings Upgraded by Standard & Poor's Ratings Services MarketWatch - announced today that Standard & Poor's Ratings Services (S&P) has raised the company's credit ratings, including its corporate credit rating to BB+ from BB. ... |
Housing crisis spurs sharp jump in bankruptcies San Jose Mercury News, USA - Now, a growing number of filings are related to the housing crisis, say local judges, attorneys and credit counselors. In Santa Clara County, ... |
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