Loans By Kathy: January 2011

Credit is everything....

Well maybe not everything, but it is huge part of the mortgage process.  Not only should you know your credit score, but you should also understand what components determine the score.  Also, the scoring model for a mortgage application might give you a different score than one you pull from an online source.

Here is the breakdown:

35% payment history - which includes the type of account, the recent activity and the severity

30% balances - what is the ratio between credit limit and credit balance

15% credit history - how long have you had credit, the age of the accounts

10% credit type - bank card, department store, travel cards

10% inquiries - the number of times you have applied for credit

With 35% of your score dependent on payment history, you can see where a 30 day late can severely impact the score.  A public record, such as a bankruptcy, foreclosure or judgement can drop your score from 100-200 points. 

Credit card balances should be kept at no more than 30-50% of the credit limit.  Once the accounts approach the credit limit, the score will begin to drop.  An account that goes over the credit limit, has dropped scores from 10-50 points.

Credit history is important, someone with relatively few tradelines or all recent accounts, will be affected more by inquiries and new accounts.

For more information on credit scoring and how to improve your score, please feel free to give me a call.

 

 

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Kathy Sheehan Senior Loan Officer

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11475 Great Oaks Way, Suite 350, Alpharetta, GA 30002

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.

 

Comment balloon 14 commentsKathy Sheehan • January 13 2011 03:43PM
Credit is everything…
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Well maybe not everything, but it is huge part of the mortgage process. Not only should you know your credit score, but you should also understand what components determine the score. Also, the scoring model for a mortgage application might give… more