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WHAT’S A FICO®?

What is a FICO® Score?

FICO® stands for Fair Isaac & Company and is the name for the most well known credit scoring system, used by Experian. The credit bureau’s computer evaluates a complete credit profile and assigns a score, which is used to estimate credit worthiness. Each of the three bureaus (Experian, Trans Union, Equifax) employs its own scoring system, so a given person will usually have 3 separate scores. Someone with a higher score will be viewed as a better risk than someone with a lower score. Typically, scores will range from about 600 to 700 or above, although some cases will be outside this range.

What Kind of Score Do I Need for a Home Loan?

There are as many answers to this question as there are loan programs available. Most lenders will take the average of all 3 scores to evaluate an application. Niche loans, such as Easy Qualifier and low down payment loans will have higher FICO® requirements.

How is My Score Determined?

The FICO® model has 5 main elements:

  1. Past payment history (about 35% of score) The fewer the late payments the better. Recent late payments will have a much greater impact than a very old Bankruptcy with perfect credit since.
    Myth - paying off cards with recent late payments will fix things. Payoffs do not affect payment history.
  2. Credit use (about 30% of score) Low balances across several cards is better than the same balance concentrated on a few cards used closer to maximums. Too many cards can bring down the score, but closing accounts can often do more harm than good if the entire profile is not considered. BE CAREFUL WHEN CLOSING ACCOUNTS!
  3. Length of credit history (15% of score) The longer accounts have been open the better for the score. Opening new accounts and closing seasoned accounts can bring down a score a great deal.
  4. Types of credit used (10% of score) Finance company accounts score lower than bank or department store accounts.
  5. Inquiries (10% of score) Multiple inquiries can be a risk if several cards are applied for or other accounts are close to maxed out. Multiple mortgage or car inquiries within a 14 day period are counted as one inquiry.

How Can I Raise My Score

Your score can only be changed by the way that item is reported directly to the credit bureaus (Experian, TU, Equifax). Written confirmation from the creditor is required. It is best to make these corrections before you try to purchase a home, because you can never be sure the exact impact a change will have on your score.

What Does This Mean to Me?

You should have your credit reviewed BEFORE you look for a home, and work with a PROFESSIONAL loan officer to make sure your loan is based on the most accurate information.

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Cindy Baughn, CRS,SRES,ABR,GRI,TRLP,PT50
Broker/Owner-Cindy Realty

"A Trusted Name in Real Estate Since 1995"


Phone: 210-445-1230
Email: ForSaleByCindy@gmail.com

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"...you understood the difficulty of the situation and how much this house needed to be sold this summer, and so you jumped in with two feet and did more than ever could have been expected...to say thank you is simply not enough...it was your heart, your kindness and your loyalty to me and to the project that touched me the most." Eileen Eberhardt Thompson
Cindy is one of the most talented professionals I have ever worked with. April 20, 2010, Will was Cindy's client Will Duke
Hardest working real estate agent in San Antonio, Texas. Danny Tamez, Design Entrepeneur
I had the honor and pleasure of working with Cindy Baughn while I was the Team Leader for Keller Williams Legacy in San Antonio. Cindy had extensive knowledge and experience as a former New Home On Site Salesperson. She was always available to help her fellow agents at the office. More importantly, and significantly, she provided her clients "World Class" service. She personified the true fiduciary relationship with all of her clients. Her commitment, dedication and integrity were beyone reproach. She always represented herself as a professional and carining real estate agent. A majority of her business came from repeat clients and referrals from many of her very satisfied home owners. She won Top Agent honors every year I was there and continued her winning ways after I departed to work for another franchise. Cindy is, without a doubt, a, "Class Act". I recommend her to anyone looking for the very best in real estate representation.less Tony Romero
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