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Results Based -
What are the results of your new goals?
Responsive -
How responsive are you to these results?
Credit scoring model
Lenders want to know how likely borrowers are to pay bills. The FICO credit score model is their best way to measure this. Our credit score is compiled from a mathematical formula that calculates details in our report.
It is a secret formula for business reasons.
Each of three bureaus use different softwares
5 factors used to make up credit score
Each factor can be determined from over one hundred different elements. We are going to look at the most identifiable of these elements in these 5 factors.
1. payment history
2. outstanding debt
3. Length of credit history = 15%
4. Mix of credit = 10%
5. Inquiries = 10%
For maximum results with your credit score there are basic Do’s and Don’ts
- 5 - Do’s
Check report consistently
Pay bills on time - early if possible - early does help scores
Get past due accts current but wait after loan is closed unless it is over limit active creditors
Use active cards at least once a month
- 5 Dont’s
Don’t close credit card accounts because of lost history and reduction of available limit
Do Not go over limit on any of cards
Do not reply to credit offers in mail
Don’t consolidate all debt onto one card
Don’t pay off all collections during the loan process it will bring score down
What do we do?
SMART credit advisors bring your score questions and issues from the darkness to be in the light.
We use specialized, very accurate processes to evaluate and determine the most effective steps to improve your credit score.
With this most important information…
When working on your mortgage- Our business partners work directly with the bureaus to get your score updated as quickly as possible (typically with in 7 business days).
Your higher score allows you to begin saving on insurance, mortgages, auto loans, credit cards and many other monthly payments.
What we don’t do…
Play games with the credit bureaus to bring you a short term credit score boost.
This includes:
-piggy backing on other peoples credit
-disputing accurate marks
-sending hundreds of letters disputing everything just to get a few things fixed
More about credit scores?
Before deciding on what terms lenders will offer you on a loan (which they base on the "risk" to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.
The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).
Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.
Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested.
Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.
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