Your FICO score

Scoring Your Credit

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You might think that the home buying process starts with getting pre-approved for a loan or with choosing a real estate agent. In reality, the home buying process starts with your finances. To become a homeowner, considering your credit score is a must along with the type of lender for which you’ll qualify in Laramie, Wyoming.

The Fair Isaac Company calculates your FICO score on the summary of your total credit history. The score ranges from 300 to 850, with most people normally having a score of 600. Even though more people these days are experiencing job loss and delinquent credit cards, FICO scores aren’t necessarily adjusted “on a curve.” A low score is just that and often means you can’t get a loan. Some of the pieces in calculating your FICO score include:

  • Payment History — Do you pay your bills on time every month?
  • Credit to Debt Ratio — How much do you owe versus how much credit you have available?
  • Credit Inquiries — How many times has your credit history been accessed by someone other than you?
  • Types of Credit — Do you have a healthy mix of loans and credit cards?

When you apply for a mortgage or any other loan, lenders want to make sure that extending a loan to you isn’t a problem. Your credit score gives lenders a view of what type of borrower you’d be solely because of your credit history. Because of the shift in the economy, most home buyers should have scores in the range of 740 or higher to get a decent interest rate. You’ll still qualify for a mortgage loan with a lower score, but the interest paid in the long run could be more than double the amount of an individual with a higher FICO score.

I’m used to working with all levels of credit scores. Contact me and I can help you get on the right track to the home of your dreams.

How do you get a higher score? Improving your FICO score takes time. It can be difficult to make a large-scale change in your number with small changes, but your score can improve in a year by keeping tabs your credit report and by wisely using credit. The best way to do this is to know your FICO score. You’ll improve your credit score by using these tips:

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  • Keep up with payments. Late payments hurt your FICO score. It’s one of the reasons people who have recently experienced job loss see the biggest hit in their credit score. Yes, it takes longer to build up your credit with payment history, but it’s the surest way to prove that you’re able to make payments to a bank.
  • Ensure that your credit history is correct. If you discover mistakes on your credit report, write to the bureau requesting that the item be removed. If you have a common name or the same name as a family member, you’ll want to give extra care to make sure the activity reported is correct.
  • Even out your debt. At first, this doesn’t seem like a good idea. But, you want to avoid of having one card that is at the limit and have your remaining cards at a zero balance. It’s better to have each of your cards at an even balance than to have the majority of your debt taking up the balance a single card.
  • Apply for gas station cards or chain store credit. For those who have no credit or below average credit, chain store credit cards and gas credit cards are ways to start your credit history, increase your credit limits and keep up your payments, which will raise your FICO score. You should always beware of charging a high balance for too long because these types of cards traditionally have a surprising interest rate.
  • Keep your cards active. Whether you have older cards, or are just getting started with credit, be sure to use your cards so that your accounts stay active. But, pay them off in one or two payments.

Knowing the ways you can raise your credit score, you can move toward becoming a homeowner. Keep in mind that when you’re ready to apply for a loan to purchase a home, you’ll want to keep your credit inquiries within a two-week window to avoid a negative mark on your credit score. With the help of Aspen Real Estate of Laramie, shopping for a mortgage can be a stress-free experience so you, too, can achieve home ownership.

Learn more about FICO scores at www.myFICO.com, Fair Isaac’s informational site and you can review all of your credit reports for free each year at www.annualcreditreport.com. And, for a small payment, you can get your FICO score from each bureau on their websites: www.equifax.com, www.experian.com and www.transunion.com.

I work with all tiers of FICO scores and can help you step into home ownership with the right lending insitution for you. E-mail me at robinvicchy@laramie-realestate.com or call (307) 755-5200 for additional information.