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The Realtor
Suzie Needzabuyer
The Buyer
Joe Spendzalot
The Certified Mortgage Planning Specialist
aka–The Loan Officer
The Mission
The Certified Mortgage Planning Specialist
aka–The Loan Officer
The Buyer
Joe Spendzalot
What is a Credit Score
Statistical evaluation of a borrower’s creditworthiness
The Fair Isaac Model
( FICO)=
The Fair Isaac Model680
679 7.625% = $1906mo.
6.750% = $1687mo.
$300,000 loan
The Fair Isaac Model
1 pt.680
679
$218 / month
$2,625 / year
$13,125 / 5 years
Defining the Score
850-Highest
Outstanding -720
Good - 680
Danger - 620
500-Needs work
Three Credit Reporting Agencies
Get a copy from all three agencieswww.annualcreditreport.com
Lenders use a median score from these three agencies
5 Credit Score Categories
InquiriesMix of Credit
Average Age of FileRevolving Debt Ratio
Payment History
Delinquency
1
Payment History
Thirty (30) day late payments
Level – 30,60,90,120 days late
Charge-offs, repossessions,& foreclosures
Collections and Charge-offsHave lender pull report, use simulator, let’s pretend
Not buying a home…no need to micromanage credit
Buying a home…call lender, prepare strategy, negotiate!
Write your own letter!
Other option...pay off debt…last activity date brought current
Past Due Balances
Late payment vs. past due balance
Minimum–always pay past due balance
“Past due” is predictive by scoring model
Missed Payments
Low payment vs. high payment
Low payment vs. 90 days late
Predictive factors by scoring model
Delinquencies
Delinquencies on Credit ReportsChapter 7 & 11
Chapter 13
Tax Liens*
Late payments
Charge-offs
Judgments
Inquiries
Years from filing date
Years from filing date
Years from date satisfied
Years from payment date
Years from 1st late payment
Years from filing date
Years from inquiries
Carrie DeSalvo – Your Certified Mortgage Planning Specialist
Debt
2
Revolving Debt Ratio
Distribute your balances to lower the %
Balances; 10%, 30%, 50%, 70%
The amount you owe divided by high credit available
1
2
Revolving Debt RatioIncreasing the Credit Limit
High Credit Limit Reported?
3
4
Zero Balance Full balance when bill generates
Call creditor or estimate balance due
Pay bill in full 10 days before due date
Age
3
• 15% Average age of credit file
Average Age of FileStriving for 800 credit score
Let that credit card have as many birthdays as possible
Remember the debt ratio
Let your credit card have as many birthdays as possible
• 15% Average age of credit file
Average Age of File
Illegal piggyback
Helping a young family member
Let your credit card have as many birthdays as possible
Mix
4
Credit Mix
Optimal; 3-5 credit cards, auto loan & mortgage
Mortgage payoffs– scoring model
3-5 Revolving Credit Cards Auto Loan Mortgage
Credit card closing accounts
Credit Mix
3-5 Revolving Credit Cards Auto Loan Mortgage
Equity lines of credit–low or high
Credit card closing accounts
Remember mix is only 10%
Inquiries
5
• 10% Inquiries
May we pull your credit report?
Credit Check Inquiries
Between 2- 50 points–average is 5 points
Auto & mortgage inquiries
Insurance-employment inquiries
www.myfico.com
Attributes
Increase Credit Scores
Use credit cards once every 6 months–pay off
Open secured credit card
Keep credit separate from spouse
640690
740
800
Other Reporting Agencies
www.innovis.comwww.innovis.com
www.choicetrust.comwww.choicetrust.com
Medical information bureau
Specialty report agencies; gambling, checking accounts, medical claims & insurance
Check Your Credit Regularly
Start eating right
Brush your teeth really well
Check Your Credit Regularly
Missing one revolving credit account in good standing
Check Your Credit Regularly
Omitted mortgage account that had never been late
Check Your Credit Regularly
Contained conflicting information regarding on-time payment
Check Your Credit Regularly
Potential misclassification into sub-prime category due to inaccurate data
Check Your Credit Regularly
Conclusion
What does all this mean.
Knowledge is Power!
Our first home !