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WHAT’S A FICO®?

What is a FICO® Score?

FICO® stands for Fair Isaac & Company and is the name for the most well known credit scoring system, used by Experian. The credit bureau’s computer evaluates a complete credit profile and assigns a score, which is used to estimate credit worthiness. Each of the three bureaus (Experian, Trans Union, Equifax) employs its own scoring system, so a given person will usually have 3 separate scores. Someone with a higher score will be viewed as a better risk than someone with a lower score. Typically, scores will range from about 600 to 700 or above, although some cases will be outside this range.

What Kind of Score Do I Need for a Home Loan?

There are as many answers to this question as there are loan programs available. Most lenders will take the average of all 3 scores to evaluate an application. Niche loans, such as Easy Qualifier and low down payment loans will have higher FICO® requirements.

How is My Score Determined?

The FICO® model has 5 main elements:

  1. Past payment history (about 35% of score) The fewer the late payments the better. Recent late payments will have a much greater impact than a very old Bankruptcy with perfect credit since.
    Myth - paying off cards with recent late payments will fix things. Payoffs do not affect payment history.
  2. Credit use (about 30% of score) Low balances across several cards is better than the same balance concentrated on a few cards used closer to maximums. Too many cards can bring down the score, but closing accounts can often do more harm than good if the entire profile is not considered. BE CAREFUL WHEN CLOSING ACCOUNTS!
  3. Length of credit history (15% of score) The longer accounts have been open the better for the score. Opening new accounts and closing seasoned accounts can bring down a score a great deal.
  4. Types of credit used (10% of score) Finance company accounts score lower than bank or department store accounts.
  5. Inquiries (10% of score) Multiple inquiries can be a risk if several cards are applied for or other accounts are close to maxed out. Multiple mortgage or car inquiries within a 14 day period are counted as one inquiry.

How Can I Raise My Score

Your score can only be changed by the way that item is reported directly to the credit bureaus (Experian, TU, Equifax). Written confirmation from the creditor is required. It is best to make these corrections before you try to purchase a home, because you can never be sure the exact impact a change will have on your score.

What Does This Mean to Me?

You should have your credit reviewed BEFORE you look for a home, and work with a PROFESSIONAL loan officer to make sure your loan is based on the most accurate information.

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Shawn Ramsey
Brokers Real Estate
1602 Forest Glen Ct.
Pantego, TX 76013
Office: 682-233-0224
Cell:    817-360-9045
Email: sramsey@dfwbre.com

Testimonials

"Shawn made buying my first home a breeze! He took the headache out of all the paperwork, the inspection process, and the endless search for the perfect house. In two weeks of working with him, we found exactly what we were looking for. He is knows the ins and outs of foreclosures. I'm thankful for the referral! " Jennifer Shoemaker
"Hey Shawn! I was just thinking about you today because I noticed it was the 23rd - its been 4 months since we've closed. I can't believe its already been that long. I don't know if I thanked you enough for everything you did for me and Josh. So, here's another "thank you." We were pretty clueless on the process because it was our first home purchase, and you made us feel so comfortable. We love our house! Our summer was sort of crazy, so we're still making it our "home." But its still wonderful even if I still have some boxes here and there. Anyways, I'll let you go because I know you're busy busy! Oh, thanks so much for the fridge! You saved us some money and shopping! Thanks again for everything!!" Julie Calahan
"We were relocating from Pennsylvania to Dallas and had a very short window in which to find a house. We selected online the houses we wanted to see prior to our arrival and Shawn arranged and mapped out three days worth of houses to view. By the time we left we had a house. While still in Pittsburgh Shawn helped us finalize our closing from a far and assisted us with finding numbers to utility companies and or anything we needed. We have moved every year for the past 5 years and this by far was the best experience yet!" Withheld
"Shawn was extremely helpful, efficient and organized. He respected our busy schedules, only requested necessary information and worked well with our schedules to assist us in finding the perfect home." Rick Ybarra
"It was a great experience. Shawn was an outstanding communicator and went above and beyond to make us feel comfortable throughout the process. He kept our best interest in mind at all times and made the purchase of our home the easiest real estate transaction we've ever had. Simply outstanding." Chris Hill
"He worked with me very well and explained how the purchase process works." Withheld
"I can't begin to tell you how FANTASTIC Shawn is! Shawn always had my best interests in mind. He never tried to force anything on me and ALWAYS told me when things weren't up to par. I grew to trust and value Shawn's opinions and expert knowledge of not only the real estate biz but also this neighborhood and the real estate market. I was totally terrified of buying a house by myself, but Shawn was there by my side from the beginning to the end and STILL called to check up on me after we closed. Explaining every step (over and over sometimes) and calming my fears... Shawn was great. Thanks for SUCH a great time Shawn. I'm almost sorry that we're done buying a house! :-) It's been a great pleasure working with you and getting to know you!" Brenda Schumacher
"There were difficult situations that popped up and Shawn was always knowledgeable and available at all times to solve the problem." Withheld
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