Archive for November, 2010

The Effect of Low FICO Credit Scores to Job Employment Opportunities

Posted in Finance on 11/29/2010 05:38 am by
Rachel Rishul asked:




People who value their financial life always take their credit score into consideration. They try to boost their credit scores for as much as possible. It is simply because your financial life will be very much affected if you will have a low FICO score. Basically, a low score will limit your options on almost everything. If you have a low score, your choice of apartment may be very limited. The better complexes after they read your reports will most likely deny your application.

When this happens, you will be forced to live in a complex that you did not like since your options are only limited. However, these consequences are not as big as the other effects of a low credit score. Did you know that a poor FICO score can affect your employability?

It is one of the worst consequences that a person can get because of bad credit history. With the current economy that we are facing right now, a lot of people are looking for jobs. High prices of everything and high unemployment rate is part of the economy right now. One of the reasons why people do not get the job that they want is because of bad credit history. Basically, the higher your credit score is, the better your chances to be hired for a new position in a company.

You may all be surprised but a lot of employers check the credit reports of their new hires just like any lenders do. When the companies see your records and you have a high FICO score, they will believe that you are a responsible and reliable person. Your high credit score will prove that which means that you paid your bills on time.

However, if you have a low FICO score, your resume will most likely be placed at the bottom of the pile. Also, if the job you are looking for requires a background check, then you will have a hard time getting the position that you want. When companies perform a background check, an employment credit score check is also included. If you have a low FICO score, then you really have a small chance of passing it.

Credit score really had a huge impact when you are searching for a new job. If you are currently working on some loans, try to repay it on or before due date and try to build up your credit score.

Shannon
 

FICO Score Below 500 and Refinancing

Posted in Real Estate on 11/20/2010 10:37 am by
Ben Afzal asked:




Lender Types

There are lenders who specialize in borrowers with a FICO score of below 500.

Most other mortgage lenders will generally not work with borrowers who have a credit score below 500.

It is important to know that the credit score is the “midscore” of three different credit scores most people have on their credit scores. It is the middle score of the three scores on your credit report.

Loan Types

Lenders may offer regular loans such as a 2/28 (2 year fixed) loan or an interest only mortgage.

Lenders may approve loans to borrowers who are self-employed and have FICO scores below 500.

Also, borrowers do not necessarily have to document their incomes. They may be able to state their income rather than documenting it.

Most Important Factor

Mortgage lenders will usually only lend up to 65%-70% of the value of a property.

This amount of equity gives the lender some security in making the loan. There is enough equity in the property for the lender to recover their loan if the borrower stops making payments.

Bankruptcy and foreclosures will not necessarily stop these borrowers as well.

You may also be able to get the loan without a prepayment penalty.

Investment Properties

Lenders may opt to lend on investment properties as well for 500 FICO scores or less.

It usually helps to have substantial equity in the property.

Interest Rates

The mortgage rates on these types of loans generally tend to be higher than for people with bad credit.

Eric
 

A Guide To The FICO Credit Rating Score

Posted in Finance on 11/20/2010 12:42 am by
Aileen L. Gardner asked:




An individual’s personal credit rating is among the most important aspects of their life. Credit is an essential part of everyone’s personal finances. People who obtain credit usually get it in the form of credit cards, consumer charge cards, auto loans and personal loans. Once a person gets this credit they need to eventually pay the money back. Therefore the credit rating is the measure of a person’s ability and dependability in paying back their debts.

There is a number that is used to measure a person’s creditworthiness. This numerical score is known as a FICO score. The FICO score is a number that ranges from 350-850 where the higher the number, the better a person’s credit rating is. Having a very high FICO score is very essential in order to get car loans, mortgages and other types of credit at the lowest possible interest rates. If someone has a low credit score and low FICO ratings, they will need to pay a lot more money than usual.

There are a few ways that a FICO score is measured and determined. First the FICO ratings are determined by how many and how often timely payments are made. If an individual pays their bills and financial obligations on time, then their score will increase and be quite favourable. The second way a FICO score is measured is how much credit is used. It is best to use no more than 40% of available credit as it is a sign of responsible borrowing. Another way the FICO score and credit rating is determined is by how long the credit has been used. In most cases, the longer the credit account has been open and active the more favourable the credit rating will be.

The average credit score is about 700 so your credit rating will considered quite adequate and favourable to most issuers of credit. It is best to get the score as high as possible so that you can have the most favourable terms for mortgages, car loans, credit cards and other forms of credit.

To increase your score you will need to borrow responsibly and not overextend yourself. You will have to pay your bills on time and use no more than one-third of your available credit. It will also be best to use credit only when you need to so that you don’t end up using too much of your credit and risk default. These measures will be in a person’s best interest in establishing a top credit rating.

Susan
 

How My Fico Score Can Affect Me When Buying a House

Posted in Finance on 11/19/2010 12:30 am by
Tony Banks asked:




Your FICO score is one of the most important determining factors when deciding to extend you a loan to purchase a home. The others would be your income as well as financial stability which is determined by the length of time you spent at your current place of employment among other things.

Here is why your FICO score is important… FICO stands for Fair Issac Company and they are a company that is in business to assist businesses with determining risk based on a totality of the information contained in their credit report.

FICO uses what’s called a “FICO score” to sum up this risk. A score with a range from 400-800 is assigned to each credit report. The higher the score that means the lower the risk of default to the creditor.

This is a working system. There have even been studies into the amount of people that default on their loan based on their FICO score, and this is why lenders will not lend without a minimum score. On the other hand, the ones that will lend do so at high interest rates to offset the risk on their part.

So to answer the question, how does your FICO affect buying a home? The answer is that a low score will cause you to have a high interest rate and in most cases, make your chances of approval very slim while having a good score would allow you to get the lowest interest rate possible.

But keep in mind that a low rating does not have to remain low and does not mean that you will never be able to own a home of your own. It simply means that you need to learn the steps to improve your credit to get the home of your dreams!

Chad
 

Your Home Mortgage Loan and Your FICO Score

Posted in Real Estate on 11/18/2010 02:36 am by
Alan Lim asked:




When you apply for a home mortgage loan, you will realize that there are a number of requirements that you have to accomplish, before you can finally be approved and obtained additional funding. One of these is your FICO score.

What Is FICO Score?

FICO stands for Fair ISAAC and Company. This is a professional credit bureau that is being looked up to by numerous lenders. The data they can provide will help them evaluate if you’re capable of paying your debts as well as how much you will be entitled for, if ever you get approved by your lending company. Simply put, it provides your credit rating.

How Can It Affect Your Home Mortgage Loan?

The logic for this is very simple. Lenders will never be able to extend very huge loans to people who have poor FICO score. They won’t be able to enjoy too better loan terms. Normally, if you have bad credit rating, the interest rate for your home mortgage loan will be considerably high. Moreover, the payment term will be shorter than those extended to people with better credit score. If you’re applying a loan to reputable lending companies, you will likely be denied of your applications if you don’t have excellent FICO score.

What Are the Advantages of Having a FICO Score?

Besides having a home loan with low interest rate, you can also have the chance to negotiate your interest charges. This way, you can still bring down your monthly repayments and save more money out of your home loan. FICO score will also speed up the process of approving your loan. You don’t have to wait for weeks before you can obtain the money that you definitely need.

What Is an Ideal FICO Score?

A FICO score that ranges from 600 to 640 is considered to be the most ideal, and there’s a guaranteed chance of availing home mortgage loan. What’s more, you can even request your lending company to automatically give you 100 percent financing. This means that you don’t have to make any down payment or pay any fees before you can enjoy the home mortgage loan. If it’s going to be between 500 and 600, you may still be able to obtain a home loan, but you may have to pay a down payment as well as other costs. You can also expect your interest rate to be slightly higher and the length of your repayments much shorter. Sadly, if it’s going to be below 500, you better try your luck next time as it’s almost impossible to obtain a loan with this kind of rating.

Is There No Way to Obtain a Loan with Bad FICO Score?

To put it bluntly, you will decrease your ability to obtain a workable loan if have bad FICO score. As a matter of fact, there’s bigger chance of getting denied than getting approved. It doesn’t mean, however, that you don’t have any option left. There are still a number of companies that may use other factors, besides FICO score, in determining whether you deserve to be given a loan or not.

Jared
 

The Effects of Closing Accounts on Your FICO Score

Posted in Finance on 11/14/2010 10:57 pm by
Kyle Gentile asked:




You want to apply for a mortgage and don’t want a lot of credit card accounts just sitting on your credit report because you think it is going to hurt your FICO score.

 

How Does Your FICO Credit Score Affect Auto Insurance Rates?

Posted in Finance on 11/13/2010 05:06 pm by
Rachel Rishul asked:




Nowadays, people are finding for the best ways on how to support them in all of their credit options. These credit options include mortgages, credit cards and auto loans and having a good credit score can help people to apply for a loan successfully.

In addition, more and more people are looking for the service like FICO can provide. Your FICO score is a better method of knowing the people’s creditworthiness, because it uses a system wherein it is more accurate and exact in comparison with others. Also, FICO is based on a point system that can determine what type of credit products people can get, depending on what their scores are.

In particular, people who want to get low auto insurance rates need to have all the essential documents in order to help them apply for that insurance. If they have these things, they can be able to have the insurance that they want. However, a low credit score can really affect the insurance rates.

FICO score ranges from 300 to 850, whereas 850 being the highest. People with higher points are likely to have the benefits in getting the lowest auto insurance rates compared to those who have bad credit scores. Also, as some reports suggests, insurance companies suggests that people with good credit scores are those who are careful in their actions. For example; a person with a good FICO score applying for an auto insurance are those who are careful when driving.

On the other hand, people with bad credit do not have the sufficient amount of money in their pocket to pay for the loans, compared to those with good scores who have money readily available in their pocket. Also, these people with bad credit score are more likely to show feelings of impulsiveness and aggressiveness in their ability to judge, which can really affect their attempt to apply for a loan, and also narrowing their chances to get that loan.

People should determine their FICO scores in order to formulate if they are entitled to get auto insurance, because it is not that easy for every person to have this loan for it will take some time for insurers to know if they are eligible in getting loans or not.

FICO credit scores are best way to help people if they can obtain insurance but they must also know that for them to succeed in their attempts, they must have the essential score suitable for them and for the insurers.

Tyler
 

What’s NOT in a Credit Score Calculation

Posted in Howto on 11/12/2010 01:38 am by
VideoCreditScore asked:


www.videocreditscore.com – This short Q&A addresses what’s not in your credit score. Race, income, gender, age all do not input into your score. Even rental agreements do not factor in.

Emily

 

New FICO 08 Credit Score Changes

Posted in Finance on 11/09/2010 06:02 am by
John Dow asked:




There is a new FICO credit scoring system called FICO-08 that was designed to better serve the credit industry. The two major changes are about small inconsequential infractions and people who piggyback onto others good credit history. This new scoring method has been in testing for the past 6 months by over 400 different companies.

Your credit score is a number, somewhere between 300 and 900, that is determined by your credit history and a basis used for predicting whether you will pay your debts. The FICO credit score is the most often used method in determining creditworthiness of individuals by credit granting companies. FICO stands for Fair Isaac Corporation and they created the first credit scoring system in 1958.

This FICO credit score was originally designed to address investments but was updated to rate individuals in 1970 when credit cards became more popular. The three major credit bureaus, Equifax, Experian, and TransUnion, use the FICO scoring method to provide information to many lending institutions. Both the credit bureaus and the lending institutions may add additional enhancements but the FICO score is usually the base used most often.

Lenders can use FICO credit scores to determine if an individual qualifies for a loan, the interest rate, and what their credit limits should be overall. No one knows the exact methods that are used to determine the actual FICO credit scores; it’s a closely guarded secret. The main concern being that people will try and misrepresent information to mislead the scoring method.

The goal of this new credit scoring method was to lessen the impact of one or two late payments. Anyone can have a lapse of memory, or be on vacation, or even in the hospital when a payment is due and blow it. This type of scenario should not have a major negative impact on a credit score.

The new scoring system now ignores minor delinquencies of $100 or less or a single delinquency when determining your credit score that are over two years old. However, if there is long-term evidence of tardy payments, it will still have a negative impact on your score.

Another change has to do with the amount of credit used or how close you are to your over all credit limits. As an example, if your overall credit limit has been determined to be $20,000 and you are at $18,000 in credit used, this will have a negative impact. This has always been a factor but more importance has been attached to that factor in the new scoring method.

Another area that has been adjusted is where one individual has piggybacked onto another individual’s credit. The most common method for this type of scenario is when someone without credit or a low credit score is added to another individual’s credit card account that has a better credit score. This practice is widespread and people actually sell this type of service.

In order to eliminate this type of practice, the new scoring system grants no advantage. The new FICO-08 scores will single out individuals who are named as authorized users and no credit for this practice will be assigned. This is a good example why the credit scoring methods are not disclosed to prevent this type abusing the credit system.

Not all lenders are using this new method but most will probably adopt it over the next year. Mortgage companies who use private investors, Fannie Mae and Freddie Mac, or normal conforming loans still have not adopted the new method. But most lenders in the auto, regional banks, and credit unions have started using FICO-8 scoring.

Frederick
 

FICO Credit Score History

Posted in Finance on 11/03/2010 03:54 pm by
Linda Adams asked:




Do you know Fair Isaac? The Fair Isaac Company is the creator of the FICO score: that little three digit number that controls your ability to get a decent rate on your credit cards, mortgage loan, or car loan. It also impacts your ability to get car insurance, home insurance, and even to get a job. How can that be?

The Fair Isaac Company was founded in 1956 to provide data to help businesses make smarter decisions. In 1995 Fannie Mae and Freddie Mac gave the FICO score an important credibility boost when they recommended that lenders use the FICO score to qualify mortgage loan applicants. Imagine having no idea why your loan was disapproved except that something called a FICO score was not good enough. It was not until recently that the Fair Isaac Company was even willing to share the major categories that they use to calculate your score. The exact formula that is used to calculate your credit score is still a closely guarded secret. However, thanks to Internet lenders who in early 2000 published some of the FICO guidelines in response to public outcry over the secrecy, Congress finally made it a law that people should have access to their scores.

Over 65% of lenders now use the FICO scores to make sure that they will be able to get back the money that they lend. If it is even slightly possible that you will pay late or default on your loan those lenders will raise your interest rates or even deny you credit. In the next series of articles I will cover the five factors that affect your credit score: Payment History, Amounts Owed, Length of Credit History, New Credit, and Types of Credit.

 
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