FICO Score. Home Loan

One of the best-known credit scores in the United States is the FICO score, calculated using mathematical formulae developed by the Fair Isaac Corporation. The three major American credit-report agencies-- Equifax, Experian, and Trans Union-- all use variations on this scoring formula under different names.

A credit score is a numerical index which represents an estimate of an individual's financial creditworthiness. Lenders, such as credit card companies, use credit scores to determine credit limits and interest rates.

FICO and Credit Scoring
If you're in the market for a loan, and especially for a home mortgage, you've probably heard the term "FICO Score" or "Credit Score" or even euphemisms like "strength of your application". "Credit Scoring" is a means of applying a sophisticated mathematical model to your credit behavior, and the behavior of other borrowers like you. It's a way to more accurately gauge how great of a risk you represent to a lender. Although there a dozens of scoring models being employed (and more on the way) the most well-known company in the scoring business is Fair, Isaac and Company.

FICO Scoring is a numerical score that is developed and factored into several equations. The scoring system usually ranges between 300 to 850. The lower end being a poor credit rating. Typically scores of 620 and below is where the bounderies shift. Scores below the 620 range is usually higher risk for lenders and will often charge more fees or a higher risk. (Scoring system is different for every company that is in this type of business. Our EXAMPLE is on a best guess effort)

Breakdown of your FICO Score: (all information is on a best effort guess and you should contact your credit report agency for an exact break down in scores and percentages)

• 35% Payment History (Recent history weights a bit more than leanthy past history)
• 30% Amount of Outstanding Debt you have with all your creditors (This includes Department Stores, Credit Cards, Auto Loans, House Mortages & Bank student loans) This is also known as Debt to Income
• 15% Leangth you have had credit for. If you had some sort of credit the longer you have have had a history with payments made within your pay period, this would be to your advantage.
• 10% Recent History your recent history of loans & credit lines you applied for in the past couple of months.
• 10% Credit you currently hold, which is usually the amount of credit you have combined. (All your credit card available balances)
  

Madison Hunter, Inc. is a licensed Real Estate Broker with the California Department of Real Estate License# 01444750