It’s sometimes surreal to think that in the institutional Lending industry that most people are reduced to the 3 digit number known as the FICO score. As cold as it might seem at times it is “objectively” the most fair and quickest way to determine the acceptable risk level of a borrower.

I’m an “insider” that looks at credit reports all day. I’m here to tell you what is wise credit use, what’s B.S., how accurate a FICO score is and the best ways to optimize your credit so you may get financed for the Home of your dreams

FICO score and credit reports play a big part in the home loan application process, but this does not mean that potential homebuyers with a less-than-stellar credit history cannot get a mortgage loan. Many mortgage lenders work with bad credit mortgage applicants. These bad credit applicants could oftentimes receive higher mortgage interest rates.

Mortgage lenders use credit reports to determine the amount of the mortgage loan and mortgage rate, as well as other mortgage conditions and terms that they will offer the homebuyer. Usually, the better the credit, the better the terms mortgage lenders would be able to offer. Mortgage refinancing options are also dependent on the homebuyer’s credit reports. There are three major credit reporting agencies: Experian, Equifax, and Trans Union. Homebuyers may obtain one free credit report from each of these agencies every 12 months. Mortgage lenders typically look at a merged report from all three agencies.

The credit reports list the homebuyer’s history of accounts including credit card, student loans, and real estate loans. They also list auto financing plans, child support, charge offs, and other financial accounts. The reports supply information on each account, such as when the account was opened, what the current balance is, what the highest balance was, and when each past-due payment was made. If the account was closed, the reports will give the date it was closed and supply a reason if necessary.

The reports also contain public records such as bankruptcy and foreclosure. Bankruptcy information stays on the records for 10 years. Account information stays on the records for seven years after the account is paid off. The information in these reports is not completely current or it is one to three months behind the date the reports are created.

Based on this information, the potential homebuyer is assigned a credit score ranging from 300 to 850. This credit score is often known as a FICO score, named after the Fair Isaac Company that came up with this method. A lot of factors can affect the score. Late payments on the accounts and unpaid debts lead to a record of bad credit and lower the credit score.

A credit score of 720 or above is likely to yield the best interest rates. Typically, the minimum score for mortgage lenders to approve a 30-year fixed-rate mortgage with a reasonable interest rate is 620. Potential homebuyers with bad credit will probably have scores lower than this. These homebuyers can try to repair their credit and increase their credit score.

To repair credit, experts recommend that homebuyers submit all payments on time and pay off all overdue debt. Of course this is common sense. Some of the not so common sense approaches are the following.

1. Keep all revolving debt (credit cards) below 50% (or below 33% is even better) of the Total credit limit; spread it out across different accounts if you must.

2. Never Close out accounts after they are paid off just don’t use them (this has to do with utilization ratios of available credit) If you must close accounts always close the newest accounts first and leave the older well established accounts open

3. Stay away from lending sources that are considered “Finance” companies. It seems that these types of loan sources can actually hurt credit scores in some instances.

4. Dispute inaccurate info on all 3 of your credit reports as well as with the actual creditorsPreferably send a dispute to the creditor first, wait a week and send a dispute for the same account to the Credit reporting agency reporting the inaccurate info.

5. Do not constantly take actions that have your credit pulled like applying for too much credit. Too many credit inquires severely impact your FICO score

If you are going to play the loan and credit game and plug yourself into the system of “institutional lending” you have to play by the rules of the game that are established by the lending and credit institutions. As ugly as that may seem sometimes this is the world we live in. The good news is there are ways for anyone with any credit rating or FICO score to get financed for what ever they want. Albeit sometimes it requires some credit repair and fico score recovery.

The process to recovery is a long one, but it is worth going through in order for homebuyers to obtain a good home mortgage loan. For homeowners who cannot wait out the long process of credit repair, getting a mortgage loan from a lender that deals with bad credit mortgages could be a good option.I just happen to know Many sources that cater to just that needFeel free to contact me with your questions and concerns I am here to serve YOU

Copyright 2006 Keith John Gill

Keith Gill is an Experienced Lending and credit specialist serving his customers with the highest amount of Customer Service http://www.MyFicoCreditRepair.com

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Over 30 million people in the U.S.A. have credit scores low enough (less than 620) to make shopping for low mortgage loan rates very difficult at best. The major credit reporting agencies use a slightly different system to arrive at a credit score. The best known is called the FICO score, developed by Fair Isaac and Company (FICO). A FICO credit score can range from 300 to 800. Most borrowers fall into the 600-800 credit score range.

A high FICO score is your reward for paying bills on time. This is one of the most important factors that determine your California home mortgage loan rate

If you’ve had a few credit “bumps in the road” recently, and you’re asking yourself, “How can I improve my FICO credit score”? Here are 5 ways to boost your FICO credit score.

1. Paying your bills on time is the first step in improving your FICO credit score. Late payments can have a big negative impact on your FICO score, 30 days or more late on one account can lower your FICO score 50 points or more.

If you don’t like writing checks, go online and automate your bill paying.

2. Don’t max out your credit cards. The smaller balance gives you a wider difference between your balance and your credit limit.

Also, if you are planning to purchase a new car or other major item, wait until you get that low mortgage loan rate.

3. If you are sincerely interested in improving your FICO credit score, bankruptcy MUST be avoided! Bankruptcy is more negative than late payments or collection accounts.

4. Get credit counseling if you have too much debt and begin to fall behind, or can’t see a way out.

5. Keep old paid off accounts in an open status. If you close an account, it won’t help your FICO score but it could lower your credit score.

If you close an old account it could make you look like a “rookie” in the credit world. A factor in obtaining credit is how long you’ve had credit.

If your FICO credit scores are over 620, but you want to raise it, obtain a copy of your credit report and request that the credit bureau remove any errors.

About www.GoldMedalMortgage.com

GoldMedalMortgage.com provides a variety of mortgage solutions including first time home buyer home improvement loans, home equity loans, and debt consolidation loans through their partners.

For more information about California home mortgage loan rates or to improve FICO credit score please call 866 398 4664 or go to ==>http://www.goldmedalmortgage.com

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Most people know that credit scores determine what and how much you can borrow from lenders, but very few are actually knowledgeable about how credit scores are calculated.
When you attempt to borrow money from a financial institution or to obtain a credit card, the financial companies retrieve a copy of your credit report, which contains a score that qualifies (or disqualifies) you for the loan or line of credit.

Credit scores range from 340 to 850, and are used to determine the risk lenders take on when they give you money or credit. An individual with a credit score of 480 will pose a much larger risk to the lender than an individual with a credit score of 700. If you don’t know your credit score, it might be a good idea to find out.

The three credit bureaus - Equifax, Transunion and Experian - use a special type of software that uses the information in your credit report to generate a numerical score. Credit scores are sometimes called “FICO scores” because the first credit score software was produced and distributed by Fair Isaac CorporationFICO.

Credit scores are calculated using the following information:

35% Payment History

30% Amount Owed

15% Length of Credit History
10% Types of Credit Utilized
10% New Credit Obtained

Payment History

Your payment history encompasses all of your past credit accounts - including loans, mortgages, financing and lines of credit. It will include the accounts that you have “paid as agreed”; negative accounts and collections; and delinquent accounts. Delinquent accounts will show how many accounts are past due, the amount of time that the account has been past due and how much time has elapsed since you’ve had a past due payment.

Amount Owed

The part that includes the amounts you owe will include how frequently you pay down your credit, how much of your revolving credit lines you’ve used, and the total number of zero-balance accounts. This is used to determine how frequently you pay off your debts and how much you continue to accrue as time goes on.

Length of Credit History

Your credit score will also reflect how long your credit report has been tracked and how long it has been since you’ve last opened an account. The longer your credit report is tracked, the higher your credit score will be as along as you continue to make payments and to avoid collections.

Types of Credit Utilized

There are many more types of credit than just credit cards. Your credit history encompasses mortgages, auto loans, business loans and all types of financing. When you’ve used several different types of credit - rather than just revolving credit, such as a credit card - your credit score will be higher.

New Credit Obtained

New credit refers to accounts that you have opened or paid off within the last six months. New credit doesn’t hold as much weight as older accounts because you’ve had less time to pay (or not pay).

Credit scores are generated by all three credit bureaus, and you might have three very different credit scores. The three bureaus use different ways of calculating credit scores, and one bureau might have more information than another. It is up to your lenders to report positive or negative credit, and if they report it to only one company, then it will not show up elsewhere.

Copyright Ed Vegliante. Free online reprints of this article are allowed provided the resource box remains intact with a live link back to http://www.credit-card-surplus.com .

Ed Vegliante runs the website http://www.Credit-Card-Surplus.com , a well organized credit card directory enabling the consumer to compare and apply for a variety of credit card offers. Find links to secure online Credit Card Applications.

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