Buying A Home In Oakland County MI.? Take This Free Video Credit Course
HOW YOUR CREDIT SCORE IS GRADED
The newest method used by lenders to determine credit worthiness of a Oakland County MI. home buyer is credit scoring (Free Video Credit Course included). Lenders now have an objective way to assess a borrower’s application, which also removes bias and helps lenders offer better terms to those with high scores.
Credit scoring is based on a numeric scale, using data provided by the “Big Three” credit reporting agencies: Equifax, Experian and Trans Union. The scores help lenders determine the level of credit risk a Oakland County borrower may present to investors. Depending on the score, the borrower is rated A, B, C or D. Obviously, the higher the score, the lower the risk of default. This improves the options for the borrower in Oakland County and can reduce overall borrowing costs on their New Oakland County home.
Scores above 660 are usually considered A credit, according to HSH Associates, a mortgage and consumer-loan information publisher. You can score above 660 even if you were 30 days late on an installment loan or 60 days late on a revolving credit account once within the past two years. But more than one occurrence will drop your score quickly.
“B”s And “C”s
Late payments and high credit balances lower the score and the grade. If you have had a number of late payments, you will probably receive a B or C grade, possibly increasing your interest rate and hurting your chances of getting a loan.
D credit ratings are usually given to someone who recently filed for bankruptcy or has had extensive credit difficulties.
It’s All Relative
Keep in mind, however, that a score of 660 may be considered good by one lender and mediocre by another. There’s more to approving a loan application than just the credit score.
Once your application is complete, it is usually examined by an automated underwriting system and by actual human beings! Both Freddie Mac and Fannie Mae (the two largest mortgage holders in the country) tell lenders that applications should not be approved or declined based only on credit scores.
More than 100 variables are used to determine your score. There are, however, five primary categories of credit information, according to Fair Isaac, the leading firm in the area of credit scoring. They are, in order from most to least important:
1. Late payments, delinquencies, bankruptcies
2. Outstanding debt
3. Length of credit history
4. New applications for credit (inquiries)
5. Types of credit currently in use
While a lot of information goes into determining a credit score, there are some areas that are definitely not included, including ethnic group, religion, gender, marital status and nationality. These categories cannot even be considered in a loan application. Federal law protects all Oakland County MI potential borrowers from discrimination in the lending process.
Below is a series of 7 videos that will teach you what you need to know about getting your credit in shape for a future Oakland County home purchase.
Please feel free to share these videos with a friend who currently owns or is looking to buy a home in Oakland County.
Staying out of credit trouble can have a big impact on your financials for years to come!
FREE 7 VIDEO CREDIT COURSE
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