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Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
Credit Scores
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Credit Scores

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Improve Your Credit Scores

Improve Your Credit Scores

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  • 1. Take the Mystery Out of Credit and Improve Your Credit Score by 100 Points – in Just 45 Days Equal Housing Lender. Prospect Mortgage is located at 15301 Ventura Blvd., Suite D300, Sherman Oaks, CA 91403. Prospect Mortgage, LLC is a Delaware limited liability company licensed by the CA Dept. of Corps. under CRMLA and operates with the following licenses: AZ Mortgage Banker License #BK0903027, #BK0909362, #BK0908046, #BK0908050, #BK0908056, BK#0908057, #BK0908058, #BK0908731, BK#0903112, BK#0903912, BK#0906650, BK#0906913; To check the license status of your CO mortgage broker, visit www.dora.state.co.us/real-estate/index.htm; GA Residential Mortgage License #16984; IL Residential Mortgage Licensee #6424; MA Mortgage Lender/Broker License #MC2011; MS Licensed Mortgage Co.; MT Residential Mortgage Lender Licensee #120; NV Division of Mortgage Lending Mortgage Banker #1173 and Mortgage Broker #3095; Licensed by the NH Banking Dept.; Licensed Banker-NJ Dept. of Banking and Insurance #9932415; Operates as Metrocities Mortgage, LLC in NY (Licensed Mortgage Banker ر NYS Banking Department); Operates as Metrocities Mortgage, LLC in OH (Ohio Mortgage Broker Act, Lic # MB.803629.000); OR Mortgage Lender Licensee #ML-2006; PA Dept. of Banking license #1740; RI Licensed Lender #20021343LL, Broker #20041643LB; licensed by the VA State Corp. Commission as MC-2195. This is not an offer for extension of credit or a commitment to lend. All loans must satisfy company underwriting guidelines. Information and pricing are subject to change at any time and without notice. This is not an offer to enter into a rate lock agreement under MN law‭, ‬or any other applicable law‭. – 0509-63‬
  • 2.
    • To take the mystery out of the often perplexing topic of “Credit”
    • Explain the ins and outs of what impacts your credit score
    • Teach you simple ways to improve your credit score by up to 100 points
    • Let’s get started….
    Today’s Goals
  • 3.
      • Credit comes from the Latin word “creditus,” which means “to believe.” It is defined as trustworthiness or credibility, and is used every time you purchase something for payment at a later date.
    What is Credit? What is a credit score?
    • In the 1980s, Fair, Isaac and Company devised a mathematical model to predict the credit risk of consumers based on the data collected from an individual's credit report. Today, the Fair, Isaac (or FICO®) system is the scoring model most widely used by lenders. The score ranges from 300 to 850, with a higher score indicating a lower credit risk.
    • Potential lenders will usually review your credit report and use various methods to determine your credit risk. In other words, they will determine your ability and likelihood to repay debt.
  • 4.
    • If You Have Had Credit For At Least Six Months, You Should Have A Credit Score.
    • Scores Range From About 350 – 850
    • Credit Score Is Calculated Each Time Your Credit Report Is Pulled
    • Married People Do Not Share A Score
    • Mortgage Companies Go By The Middle Score Of The Three Major Credit Bureaus – Experian, Equifax and Trans Union
    • Your credit history is reviewed every time you apply for credit. A poor credit rating can result in a denial of a request for credit
    • Good credit stays indefinitely
    • Negative information stays for up to 7 years
    • Bankruptcies can stay on your report for up to 10 years
    Some Facts About Credit…
  • 5.
    • Payment history - 35%
    • Amounts owed/Types of Credit Used - 30%
    • Length of credit history - 15%
    • New credit - 10%
    • Types of credit used - 10%
    What Makes Up a Credit Score
  • 6.
    • PAYMENT HISTORY – 35%
    • Bills Paid As Agreed
    • Most Recent 6 Months
    • Highest Weight On Highest Pay History
      • Mortgage
      • Biggest Payment
    • CREDIT HISTORY – 15%
    • Longer Credit History = Higher Credit Score
    • Long Credit History Paid As Agreed/Positive Impact To Credit Score
    • Never Close Credit Accounts – Especially If Long History – May Negatively Impact Credit Score
    What Makes Up a Credit Score
  • 7.
    • BALANCES CARRIED – 30%
    • Keep Balances As Low As Possible
    • Outstanding Balance Versus Available Credit Affects Credit Score
      • For example:
      • Credit Card Balance Available Credit
      • Visa $10,000 $10,000
      • Visa $0 $10,000
    • Leave Credit Card Balance As Is = Lower Credit Score
    • Spread Balance Between Cards ($5,000 each) = Higher Credit Score
    • Mortgage / Installment Less Of Factor
    What Makes Up a Credit Score
  • 8.
    • MIX OF ACCOUNTS – 10%
    • Ideal To Have Installment & Revolving Accounts
    • Mortgage Loan
    • Auto Loan
    • 3 - 5 Credit Cards (More are o.k. as well)
    • HELOC Should Be Greater Than $40,000 Or Will Report As Revolving Acct vs. Mortgage
    • INQUIRIES – 10%
    • Shopping Around?
      • Pull Multiple Reports For Mortgage and Auto 1 Inquiry Within 45 days (for each)
    • Each Inquiry Averages 5 Points
    • Only First 10 Inquiries Count Each Year
    • After 10, Will Not Affect Credit Score
    • New Credit – 10%
    • New and recent credit are included in your ratios
    What Makes Up a Credit Score
  • 9.
    • Job-related
    • Insurance/Utilities
    • Account Review
    • Personal ( www.annualcreditreport.com ) and to obtain Free Credit Report
    • Promotional (pre-approved offers in the mail)
    Inquiries That Do Not Hurt a Score
  • 10.
      • Race, color, religion, national origin, sex, age and marital status
      • Salary, occupation, title, employer, date employed or employment history
      • Where you live
      • Interest rate being charged on a particular credit card or other account
      • Child/family support obligations or rental agreements
    What is Not Included in a Credit Score
  • 11.
    • Low Credit Score = Higher Interest Rate
    • Mortgage Loans
    • Credit Cards
    • Auto Loans
    • Insurance Premiums
    Blemished Credit Can Be Costly
  • 12. A Higher FICO Score Saves Money The rates shown are averages based on thousands of financial lenders, conducted daily by Informa Research Services, Inc. The 30-year fixed home mortgage APRs are estimated based on the following assumptions. FICO scores between 620 and 850 (500 and 619) assume a Loan Amount of $150,000, 1.0 (0.0) Points, a Single Family - Owner Occupied Property Type and an 80% (60-80%) Loan-to-Value Ratio. APR Source: © 2006, Informa Research Services, Inc., Calabasas, CA. The information has been obtained from various financial institutions and Informa Research Services cannot guarantee the accuracy of such information.
  • 13. 100 Points in 45 Days Let’s Take a Look…. How Can I Increase My Credit Score…
  • 14.
    • Pay all accounts that are past due
    • Past due accounts can = 1 day late
    • Severely hurt credit score
    • Past due accounts do not include:
      • Judgments
      • Collection accounts
    Pay Past Due Accounts CREDIT SCORE SIMULATIONS Fico Score 1 Missed Payment – (25 – 60 Decrease) 670 610-645 Fico Score Missed Payments & Bankruptcy (120-170 Decrease) 670 500-550
  • 15.
    • Phone creditor and request late payments be removed and
    • mistakes corrected
    • Be persistent – Work your way up the ladder
    • Always get a letter that documents:
      • Name/address/account number
      • Specific late to be removed or mistake corrected
      • On company letterhead -- signed by employee
    Have Late Payments Removed or Have Mistakes
  • 16.
    • The person applied for credit under different names (Robert Jones, Bob Jones, etc.)
    • Someone made a clerical error in reading or entering name or address information from a hand-written application
    • The person gave an inaccurate social security number, or the number was misread by the lender
    • Loan or credit card payments were inadvertently applied to the wrong account
    How Mistakes Are Made
  • 17.
    • Every six months request an increase to credit limit on credit accounts
    • Have creditor base increase on credit history
    • If creditor must pull credit, do not continue; will lower credit score
    • BECOME AN AUTHORIZED USER
    • Ask a relative or friend to add you to credit account
    • Confirm the following items:
      • Current balance below 10% of limit
      • Good payment history
    • No risk as credit card goes to account holder
    Increase Credit Limits
  • 18.
    • Keep all accounts open
    • Use old accounts periodically – charge small amount - pay off immediately
    • Closing accounts with a long credit history will hurt credit score
    Do Not Close Accounts
  • 19.
    • Borrow when you do not need it
    • Keep balance to limit ratio low
    • When creditor removes lates, corrects mistakes and provides letter – use credit rescore
    • Never payoff a collection/judgment when applying for a mortgage loan
    • Increasing credit score by 10 points = Interest savings of $100,000 over 30 years ($500K mortgage loan)
    Now Go Out And Improve That Credit!
  • 20. Take the mystery out of credit and improve your credit score by 100 points – in just 45 days Ray Avanzino Loan Consultant Tel: (650) 576-6531 Email: [email_address] www.rayavanzino.com Questions?

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