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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:
Clock ticks down on credit bureau class-action dealIndianapolis Star, United States - 58 minutes agoIn a class-action settlement, credit bureau TransUnion has agreed to provide free credit- monitoring services to millions of consumers to settle claims it ... |
MORE COLLEGE CREDITChicago Sun-Times, United States - 10 hours agoDespite the current nationwide credit crunch, the State of Illinois secured $100 million for the student loans by tapping a new source -- credit unions. ... |
Credit - Google News
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