Rough Credit? Discover How You Qualify, NOW!
	"A" Credit Credit History: Installment and/or revolving debt is paid as agreed. No 30-day late payment within 12 month period on all mortgage loans. No major derogatory item such as Bankruptcy or Foreclosure, in the past four years. Income: Two year employment verification. Self employment OK with two years taxes.
"B" Credit Credit History: Installment and/or revolving debt is paid as agreed for the most part (less than 50% derogatory credit 60-day lates). No more than four 30-day late payment within 12 month period on all mortgage loans. No major derogatory item such as Bankruptcy or Foreclosure, in the past two years. Income: One year employment verification. Self employment OK	"C" Credit Credit History: Traditionally slow paying installment and/or revolving debt (i.e.,  60+ day lates) Mortgage payments are usually slow, no more than two 60-day late and one 90-day late payments within 12 month period on all mortgage loans. May have discharged/dismissed Bankruptcy with a reasonable explanation within the past 12 months. May have a Foreclosure filed within the past 12 months with a reasonable explanation. Income: One year employment verification. Self employment OK	"D" Credit Credit History: May have generally poor credit (i.e., collections, judgments, liens or charge off accounts). May be currently past due on mortgage or installment and revolving accounts. May currently be in Bankruptcy with a reasonable explanation. May currently be in Foreclosure with a reasonable explanation. Income: Proof of employment or ability to repay. Self employment OK
Credit Scoring 101 Credit Scoring is designed to predict the likelihood that the borrower will have a 90 day late within the next 24 months. Criteria for scoring was developed by pulling 1.5 million credit files and dividing them into 10 groups, length of credit, derogatory credit, etc. 1. 35% of your score = Payment history and derogatory accounts. a. Frequency, severity and how long since last derogatory payment. b. Less than 6 months = Very Hard; 6-12 months = Hard; 24 months = Not Hard. c. Credit score will go up when derogatory accounts last late payment hits 7 months, 12 months and 24 months. 2. 30% of your score = Balances. a. Less than 50% of available balance on revolving charges is a big factor. b. Large revolving accounts (Equity Lines) are looked at like an installment loan. c. If the tradelines high credit limit goes up, sometimes only the highest amount charged shows as high credit limit. To raise your score, have your creditor report the actual high credit limit to bureaus. d. It is not beneficial to close revolving accounts with no balances. e. It is better to have small balances on revolving accounts than to have no balance at all. f. New accounts (a negative factor) will average out old accounts (a positive factor) and give less of a credit score. 3. 15% of your score = Age of credit. a. Accounts opened in the last 6 months are a negative factor. 4. 10% of your score = Type of credit. a. Having a revolving finance company tradeline is a negative factor. b. Even finance company backed accounts are a negative factor (i.e. Costco). c. Highest score will be given to a nice mix of credit. 5. 10% of your score = Inquiries a. Inquiries affect newer credit people more than older credit people. b. When you pull a credit report of a morgage, the repositories will look back 30 days and discount any other mortgage inquiries and eliminate any duplicate inquiries within the last 12 months. To generate a credit score, a borrower must have: 1. One line of credit. 2. The tradeline must have reported within the past 6 months. 3. Social Security number must not be associated with a deceased person. If a borrower doesn't fit the "Profile" then no score will be available. Every two years, 1.5 million files are re-looked at to develop new scoring models. A foreclosure is only as bad as a 90 day late. It only becomes a  big negative if other factors are involved (i.e. applying for a mortgage loan). Collections - There is no difference between a collection that is paid or unpaid. When a collection is paid, it will make the score go down because it will show a more recent activity date. The quickest way to raise a credit score is to have the borrower become an authorized user on an old established account. Example: Mr. Borrower becomes an authorized user on his Father's 10 year old Visa account. We hope this information will be of help to you in your effort to understand how your credit is scored. If you would like more information about raising your credit score, please contact us for a free copy of Fair Isaac's Understanding Your Credit Score.