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Approximately 35% of a score are based on this category. The first thing any lender would want to know is whether a person has paid credit accounts on time. This is also one of the most important factors in a credit score. However, late payments are not an automatic “score-killer.” An overall good credit picture can outweigh one or two instances of, say, late credit card payments. By the same token, having no late payments in your credit report doesn’t mean you will get a “perfect score”. Some 60-65% of credit reports show no late payments at all.
The score takes into account:
Approximately 30% of a score are based on this category. Having credit accounts and owing money on them does not mean that a person is high-risk borrower with a low score. However, owing a great deal of money on many accounts can indicate that a person is overextended and is more likely to make some payments late or not at all. Part of the science of scoring is determining how much credit is too much credit.
The score takes into account:
Approximately 15% of a score is based on this category
In general, a longer credit history will increase the score. However, even people with short credit histories may get high scores depending on how the rest of the credit report looks.
Your score takes into account:
Approximately 10% of a score are based on this category. People tend to have more credit today and tend to shop for credit (via the internet & other channels) more frequently than ever. Fair Issac scores reflect this fact. However, research shows that opening several credit accounts in a short period of time does represent greater risk – especially for people who do not have a long-established credit history. This also extends to requests for credit, as indicated by “inquiries” to the credit reporting agencies as inquiry is a request by a lender to get a copy of a specific credit report. The Fair Issac scores distinguish between searching for any new credit accounts and rate shopping, which is generally not associated with higher risk. In part, this is handled by treating a grouping of inquiries – which probably represents a search for the best rate on a single loan – as though it was a single inquiry.
Your score takes into account:
Approximately 10% of a score are based on this category. The score will consider the mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not necessary to have one of each, and it is not a good idea to open credit accounts that you don’t intend to use. The credit mix usually won’t be a key factor in determining your score – but it will be more important if the credit report does not have a lot of other information on which to base the score.
Your score takes into account:
THE AMOUNT OWED ON ALL ACCOUNTS AND ON DIFFERENT TYPES OF ACCOUNTS. When a lender receives the Fair Issac Credit bureau risk score, up to four “score reason codes” are also delivered. These explain the top reasons why the score was not higher. They say things like”number of accounts with delinquency.” If the lender rejects a request for credit, these reason codes can help the lender tell someone why their score wasn’t higher.
These reason codes are more helpful than the score itself in helping someone determine whether their credit report might contain errors, and how they might improve their score over time. However, if one already has a high score (for example, in the mid-700’s) some of the reason codes may not be very helpful, as they may be marginal factors related to the last three categories above.
INTEREST RATES. They are a significant influence upon our lives in the real estate industry. Low interest rates are a catalyst to our sales; more first-time buyers may emerge, more families may decide to trade up to a house that fits their growing needs. On the other hand, higher interest rates can require some extra effort to drum up more business, as monthly payments can increase to a point where buying a home is no longer affordable for some.
Interest rate movements can seem erratic if taken at face value; they’ll go up one day and down the next. The good news is there is some method to the madness! Interest rates are closely tied to key economic indicators, and it is these indicators that help the Federal Reserve and Secondary Markets establish the market interest rates.
Keeping an attentive eye on the key financial indicators can be to your business advantage. Why? Clients are always asking about interest rates. Being able to talk about rates and the effects of economic pressures builds credibility with your clients. Also, these indicators can help you anticipate future changes in the market interest rates. By foreseeing the possibilities for ups and downs in interest rates, you can adjust your business plans and strategies accordingly.
For instance, if indicators signal that rates could be expected to go down in the future, you may choose to target more first-time buyers prospects, or follow up on some past clients who you think might be in the market to trade up to a bigger, more expensive home. Conversely, an expectation of higher interest rates may signal that you need to zero in on relocation business, or follow up on announcements of employee promotions in the newspaper. Taking the interest rate environment into consideration when developing your marketing efforts can only enhance your plans!
Of course, no one can predict the future when it comes to interest rates. We’d need a crystal ball for that, but following the key economic indicators, you can begin to see the trends and use the market to your advantage. Movements in the economic indicators listed on the reverse are readily available through the news media, financial publications and the internet. The information is out there for the taking; you’ve just got to know what to do with it!
Interest rates are tied closely to the bond market. When bond prices go up, interest rates go down. The following is a list of some of the key economic indicators and how their movements may affect interest rates:
As you can see, the financial news can give you a great vehicle for communicating with your clients and predicating the potential movement of interest rates. With a little economic know-how, you can take the interest rates movements in stride with the knowledge that you can see what is coming and adjust your sales efforts accordingly. Information is power. .. use it to your benefit!
Sources: Information provided by Jane Deske of Caliber Home Loans and is intended to provide information and insight to buyers and sellers. For more information or specific questions, please contact the lender of your choice.
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