THE FIVE FACTORS OF CREDIT SCORING:
There are five factors that comprise the credit score. They are listed below in order of importance. 1. PAYMENT HISTORY: 35% impact. Paying debt on time has a positive impact. Late payments, judgments and charge-offs have a negative impact. Missing a high payment has a more severe impact than missing a low payment. Delinquencies that have occurred in the last two years carry more weight than older items. 2. OUTSTANDING CREDIT BALANCES: 30% impact. The ratio marking the difference between the outstanding balance and the available credit is important here. Ideally, the client should keep their balances below 10% of available credit limits. 3. CREDIT HISTORY: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area. 4. TYPE OF CREDIT: 10% impact. A mix of auto loans, credit cards and mortgages is more positive than a concentration of debt from credit cards only. 5. INQUIRIES: 10% impact. Inquiries can cost 2 to 50 points on a credit score, but the maximum number of inquiries that will reduce the score is 10. In other words, 11 or more inquiries in a six-month period will have no further inpact on the borrowers' credit score. Remember, a computer that's not taking any personal factors into consideration calculates these scores. When a credit report is generated, it is simply todays' snapshot of the borrowers' credit profile. This can fluctuate dramatically within the course of the week, depending on the individuals' own activities. The borrower should be made aware of this when they enter into the loan process, and know that it's not in their best interest to go out on a shopping spree. They need to make sure they are not creating a negative impact on the score while the lender is reviewing their file. Secondly, it is often beneficial to compile a Tri-Merge Credit Report. This combines the scores provided by Fair-Issac (FICO) with the score generated by TransUnion (Empirica) and the Beacon Score produced by Equifax. The lender should be provided with this rounded profile because these three scoring systems can vary in their results. The lender is going to look at the middle score and throw out the other two. In many cases, this works to the borrowers' advantage. For more information give me a call at (925) 813-0473.
One of the most common mistakes people make during the loan process is changing their loan structure in any way. Stay clear of complications.
* Do not make any changes to your career without consulting your Loan Officer first.
* Avoid making any changes to your debt structure, including paying off any debt or adding a new line of credit. This will affect your debt-to-income ratio.
* Do not make any large payments or any large purchases. This will affect your debt-to-income ratios.
ITEMS YOU NEED TO HELP & ASSIST IN THE PROCESS OF YOUR HOME LOAN:
1. W-2 forms for the last 2 years.
2. Recent paycheck stubs covering one months period.
3. Tax Returns provide last 2 years complete federal tax returns with all schedules (if self-employed).
4. Landlord information (if applicable) for last two years or name, address and loan number for mortgages for last two year.
5. Copy of 2 months complete bank statements (all pages) for all bank and asset accounts, including retirement account (last quartely or yearly statement is okay) stocks, mutual funds, etc., and whole life insurance. (Statements must have your NAME and complete ACCOUNT NUMBER printed on them.) Teaching Credentials or College Degrees, if employed less than two years.
6. Copy of Drivers License
7. Copy of business license if self-employed.
8. Copy of Permanent resident alien Card (if applicable).
9. If you currently own a home and relying on proceeds from an equity line to close escrow on your new home, you may be asked to provide a copy of the equity note and proof of availability of funds (should the lender require proof) prior to credit approval. For more information please feel free to contact me at (925) 813-0473. Or email me Juanita Anderson at Juanita.Anderson@prurealty.com. I look forward to assisting you in your real estate needs.
The Gift that Gives back.
Now, I want to thank those of you who have participated in the my client referral program! If I have already helped you in the sale or purchase of a home, you know my Clients are V.I.P's. If you refer a friend or relative to me, I will take the same high-quality of care with them as with your transaction. As a way to say thank you for your support (after the transaction closes), I will donate $250.00 towards a Gift Certificate at Loews, Home Depot or Wal Mart. This donation will be made in the person' who referred the client(s) name. So, thank you for assisting me in building my business with preferred clients, like yourself.
Juanita Anderson