5 Factors that impact your Credit Score
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5 Factors that impact your Credit Score

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In this presentation, Shashank Shekhar talks about 5 factors that impact your credit score and how to avoid paying thousands of dollars in extra cost and higher interest rate for your mortgage by ...

In this presentation, Shashank Shekhar talks about 5 factors that impact your credit score and how to avoid paying thousands of dollars in extra cost and higher interest rate for your mortgage by getting your credit history in shape.

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    5 Factors that impact your Credit Score 5 Factors that impact your Credit Score Presentation Transcript

    • Home Ownership Workshop
      What Impacts your Credit Score
      And how to get it in shape before starting the home buying process
      Shashank Shekhar
      Arcus Lending
      Mortgage Broker/Direct Lender
      San Jose, CA
    • Credit Report Basics
      3 Credit Bureaus
      Equifax
      Experian
      Transunion
      Range of Score (300-850)
      Also called Fico or Fico Score
      Fair Isaac Corporation who invented the scoring model
      Consumer report vs. Mortgage Report
    • How important is a good Credit Score
      To get same interest rate a person with 679 Credit Score pays $11,000 in cost while a person with >740 score pays nothing.
      (On a $400,000 Loan Amount)
    • What impacts your credit score
      Personal factors like Income and Assets are not taken into consideration
    • Payment History
      35% Impact
      Paying debt on time and in full has the greatest +ve impact
      Late payments, Judgments and Charge-offs have –ve impact
      Missing a high payment will have a more severe impact than missing a low impact
      Delinquencies in last 2 years carry more weight than older items
    • Outstanding Credit Balances
      30% Impact
      Ratio between outstanding balance and available credit
      Keep balances as close to zero as possible
      Definitely below 30% of the available credit limit
      Spread your expense across cards
      Pay-off the card before the statement is issued
    • Credit History
      15% Impact
      Length of time credit has been established
      Seasoned borrower will always be stronger
      Keep your old cards active; don’t close them
    • Type of Credit
      10% impact
      A mix of auto loans, credit cards and mortgages is more positive
      Keep your number of credit cards to 3
    • Inquiries
      10% impact
      Number of inquiries within a 6-month period
      Each “hard inquiry” can cost from 2-25 points
      Multiple inquiries within a 30 day period for the same kind of loan doesn’t additionally negatively impact the score
    • Steps to take before Home Buying
      Review your credit report with a lender 3-6 months before the process
      Identify items that are impacting your score
      Form an action plan to remedy those items
      Dispute the items that are being reported in error
      Hire the services of a reputable credit restoration company if required
    • Monitor your report
      To avoid identity theft you should regularly monitor your credit report
      Get a free credit report once every year at www.AnnualCreditReport.com
      Consider enrolling for a credit watch program with your bank or credit card company
    • Sign up for more such FREE web classes for Home Buyers at http://bit.ly/dCHYCo
    • www.FirstTimeHomeBuying101.com
      Finally a book about being a first time home buyer that actually gives them the information they need and not just a sales pitch.Carole Rodoni
       A book every First Time Home Buyer should read.Tim Davis
    • Let’s Connect
      FirstTimeHomeBuying101
      ShashankTweets
      www.LendingExpertBlog.com
      Shashank Shekhar
      Arcus Lending
      408.615.0655
      shashank@arcuslending.com
      www.ArcusLending.com