Credit Report and FICO Scores

Credit Report
When you authorize a mortgage company to pull your credit report the following information will show you how a lender looks at your credit history.

What is a FICO score?
"FICO" scores are a type of score developed by Fair Isaac & Company, Fico scores use credit bureau information to obtain a score which indicates how likely someone is to make their loan payments on time. FICO scores range from approximately 350 to 900. The higher the score, the lower the probability of default on the loan. Your credit history is one factor in determining if you qualify for a loan. The following list shows how a lender determines the risk base interest rate for your mortgage.

• Mid FICO score
• Debt to Income (DTI) Ratio
• Late Mortgage payments in the past 12 months (30, 60, 90 days past due)
• When you had a bankruptcy (by type) and/or a foreclosure.
• Loan to value (LTV)

FICO scores under 500 will eliminate 99% of the lenders (without looking any further at your information) across the country. Above 500 lenders take into account how much equity you have in the property, your mortgage payment history (12 months), and Debt-to-Income ratio and if the new loan will improve your situation. Scores 640 or above will receive the best interest rate and term for a loan.

What we do here at A Michigan Lending Company.
50%+ of all credit reports have information that is wrong. As part of service we provide is to help improve your reporting.

• Past paid off loans that still show a balance - update to zero balance.
• Creditors that don't show an updated payment history.
• Loans that are not reported - have placed on credit report to improve FICO scores.
• Help consolidate to free up high interest debts.

How you can improve your FICO scores.
Because each borrower's credit scores are a reflection of their unique profile. No one can tell you how much your scores will be affected if you pay off a delinquent accounts or cancel your cards. We do know however, that there are things you can do to improve your credit profile.

• Make timely payments. This is the best way to increase your scores.
• Number of trade lines. Limit the number of trade lines you have. Only choose a couple of credit cards that you use and cancel the rest. But if you don't have cards you should consider having one or two. Lenders generally want to see that you have some available credit and that you can handle your debts wisely.
• How to use credit. Only use a maximum of 50% of the available limit. Sample: $1000 Limit, use up to $500. The lower the balance the better the scores.
• Do not inquire if you do not need to. Inquires will affect your FICO scores. If you do inquire about debt, don't inquire more than 1 every 6 months (rule of thumb).

You can reach the three major bureaus at the following phone numbers.

• Equifax: (800) 685-1111
• Experian (TRW) (800) 682-7654
• TransUnion (800) 888-4213

It is created by data about you from many different sources. If your creditors subscribes to any of the above bureaus and if you are late in making payments, those to whom you owe money such as utilities, hospitals, landlords and others may inform them. These include credit cards, auto loans, or mortgage payments, it may also contain information about delinquent child support payments.