Gain a
better understanding of the factors
that determine your eligibility for a loan.
The
importance of financial responsibility is oftentimes overlooked in a
materialistic nation comprised of excessive credit card offers,
stretched lines of credit and the weakening dollar. In order to boost
financial responsibility and provide more accurate information to
credit bureaus, the company that calculates FICO scores has introduced
a revamped credit scoring system. Many consumers will benefit, but
others may face higher interest rates which may affect their monthly
mortgage payments. Become one step closer to financial confidence by
gaining a true understanding of the factors that influence your credit
score.
Determining Your Credit Score
The restructured FICO credit scoring system, created by the Fair Isaac
Corporation, is reported to go a bit easier on consumers who make an
occasional mistake, yet really crack down on those who have multiple
late payments and delinquencies. The weight put on certain factors,
like late payments, have changed, while the benefit of authorized-user
status has been dropped from the scoring system altogether. These
changes may strengthen or slump your score by 20 or more points. Get to
know the other factors that impact your credit score by reviewing the
details below.
Length of Credit History
The longer your credit history, the better. Lenders like to see that you can manage your credit accounts responsibly over time. Now that credit scoring model ignores authorized-user accounts, it is important for those “piggybacking” to establish their own credit on a new and separate account. The omission of authorized-user accounts from future FICO credit reports will enable credit bureaus to protect lenders from those trying to misrepresent their credit risk.
Payment History
Payment history is one of the most influential factors in determining your credit score. As mentioned earlier, future FICO credit reports will forgive a few late payments, but if your account shows multiple late mortgage payments and delinquencies you may see your FICO score drop.
Contact The Tampa Bay Mortgage Pro at 727-488-7355 to discuss affordable mortgage products that will enable you to maintain excellent credit and payment histories.
Amount Owed
Another significant factor that is reviewed by the credit bureau is the amount owed on your credit accounts. Having a mortgage and several credit cards will not classify you as a high risk borrower, but owing a lot of money on several accounts will. Make an effort to keep all credit balances low so credit bureaus and lenders do not assume you've overextended your financial capacity.
New Credit
Opening several credit accounts over a short period of time may present you as a risk to lenders. This is especially so for those who do not have a long, established credit history. Try to keep new credit accounts to a minimum.
Credit in Use
Be aware of the types of credit accounts you use. This includes credit cards, financial accounts, retail credit accounts, installment loans and mortgage loans. The FICO scoring program analyzes all active credit profiles when determining your financial responsibility.
Remember,
higher credit scores are the most desirable to lenders; but if yours
takes a dip, no need to fret, you may still qualify for certain loans
and mortgage products. Review your finances and work
with The Tampa Bay Mortgage Pro so that you
may better understand the role your credit score plays in your pursuit
of an affordable mortgage product.
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