FICO Quiz

Collections, Judgments, and Liens

Fannie Mae, Freddie Mac, FHA and VA require that all be paid in full and they prefer that they be at least two years old. This market is a maze of guidelines and they differ from one mortgage lender to another. This is another reason why you always want to use a mortgage broker.

997 (Score Description)

Firm has bankrupt date on file within the last 24 months

996 (Score Description)

Firms current payment status already meets the Risk definition with 25% of total balance 90+ days past due

Credit Depth Guidelines

Generally this term refers to how many trade lines you have, how long you have had them and their amounts.

Consumer Rights

Access to your file is limited

Consumer Rights

All credit companies are required by law to provide you with one copy of your credit report for free once a year. You're also entitled to a free copy of your credit report any time you're denied credit.

Consumer Rights

Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information—usually within 30 days.

FICO® Auto Scores and FICO® Bankcard Scores have these aspects in common

Many lenders may use these scores instead of the base FICO® Score It is up to each lender to determine which score they will use and what other financial information they will consider in their credit review process The versions range from 250-900 (compared to 300-850 for base FICO® Scores) and higher scores continue to equate to lower risk

Consumer Rights

You have the right to dispute incomplete or inaccurate information.

Consumer Rights

You must be told if information in your file has been used against you.

FHA credit guidelines

(one of the best loan programs on the market for people with minor issues that lower scores) and a very few non-conforming loans. Credit scores range from 300 to 850. A rule of thumb: The higher your score, less risk, lower interest and less down payment required. Lower scores could require a larger down payment and could have higher interest.

Under the Fair and Accurate Transaction (FACT) Act

, at your request, Equifax, and each of the other 2 major credit reporting agencies, Experian and TransUnion, will provide you with one free credit report every 12 months.

FICO algorithm looks at (Payment History)

1. How often have you failed to pay on time? 2. How far "past due" were you? 3. How much did you fail to pay?

length of credit history

15% of your FICO score is based on______________ There's a myth that having too many accounts can hurt your credit score. In fact, it's more important to keep your accounts open.

amount you owe, to the amount of credit you have available

30% is determined _____________________ Lenders are wary of people using too much credit, as statistics show they're more likely to miss payments

Payment History

35% is determined________________. On time payments build your score. Late payments hurt.

620-679 credit score

A credit score between _________will prompt most lenders to take a closer look at how you've handled your past credit use and your overall financial health. But you may still have a pretty good chance of qualifying for the credit you want.

680-719 credit score

A credit score between means you have good credit and probably won't have too many loan or credit-qualifying issues, but may not qualify for the best available interest rates.

720 Credit Score

A credit score of ______ or more means you have excellent credit, and should have little trouble qualifying for loans and other credit-related products.

Payment History

Ability to Pay Collections and Tax Liens Late Payments Public Records Charge Offs (7 year life)

Consumer Rights

All credit rating companies are required by law to provide you with the information they base your credit rating on when you request it.

570 and below

Any credit score below ________ will seriously limit your ability to access loans and credit

FICO algorithm looks at Step 2—Control Your Use of Available Credit

Approximately 30 percent of your credit score is calculated by weighing how much of your available credit you actually use. The scoring system's main concern is how you are handling your revolving credit (your credit cards). It looks at how much you owe on your cards and compares that amount to the credit limits on those cards.

Credit History Length

Average Age of Open Accounts Some use a 10 Year Average Age Close Small Accounts Inherit someone else's Credit History - ask them to add you on as an Authorized

Fair Credit Reporting Act (FCRA)

Congress passed the___________________ in 1970. That bill regulates how companies can collect and use information they've gathered about your credit history.

Student Loan Credit Guidelines

Defaulted __________ will haunt you for the rest of your life. Unless they are re-affirmed or paid off you will never get a conforming mortgage.

Step 2—Control Your Use of Available Credit

Don't assume that you can run a high balance, pay it off at the end of the billing period, and by so doing escape the "utilization rate" trap. You probably won't. Credit card companies report the balance that shows on your account on the date they send in their report to the CRAs

Step 3—Age of Your Accounts

How long your various accounts have been open counts for about 15 percent of your total FICO score. The scoring system weighs two considerations: 1. How old is your oldest account? 2. What is the average age of all your accounts?

Mortgage and Rent History

If you have been more than 30 days late on your rent or mortgage in the last 12 months you will not qualify for a Fannie Mae, Freddie Mac, or FHA/VA loan. possible exceptions If you have a very high score, lots of assets, and a legitimate excuse. a waiver for a late mortgage payment there are still loans available to you in the non-conforming market. The interest rate will depend on how many times you have been late.

a previous marriage FHA

If you signed, you are still accountable. (These debts will also affect your debt to income unless you can prove the other party is paying with 12 months cancelled checks.)

Credit Depth Guidelines (non-conforming)

In the _________ market these requirements vary between lenders.

Industry-specific FICO® Scores

Industry-specific FICO® Scores are designed to assess the likelihood of not paying as agreed on a specific type of credit obligation—car loans or credit cards. For example, auto lenders and credit card issuers may use FICO® Auto Score or a FICO® Bankcard Score, respectively, instead of base FICO® Scores.

personal loans, student loans, and retail credit

know your FICO® Score 8, the score most widely used by lenders

The keys to FICO

Make payments on time Keep credit card balances low Open new credit accounts only when needed

Amount Owed

Make sure you have a 30% is Balance to Limit Ratio Balance Transfers Increase limits if you can Reset Payment Due Dates to just prior to Credit Reporting Date for the Company *Capital One - doesn't report credit limits - also raises rates if Credit Score drops *AMEX - doesn't report credit limits By Law, a HELOC for more than $75k should be reported as installment debt.

Credit Depth Guidelines

Most lenders want to see at least a two years history and at least 4 trade lines. Some require one of those trade lines to have had a balance over a certain dollar amount ($5,000).

Steps to Increasing Scores (Step 1—Manage Your Payment History)

Pay everything on or before the "due date" if you can. Use an automatic payment system for loans with fixed payments (installment loans, mortgages, etc.); and for revolving credit payments establish a reliable calendar or "reminder" system that you can count on.

Prioritize Your Debt Payments

Pay off higher interest rates first; however, you should also pay off small balances quickly and completely. Also, ask your credit card companies individually to increase your credit limits (don't use it unless you must).

Types of Credit

Revolving Credit - Cards, HELOC under $75k Installment Credit -Student Loans, Auto Loans Real Estate Mortgage and HELOC's over $75k Balance Types -3-8 Revolving Accounts & Balances by Installment Real estate

5 - EXTREME RISK (Score Class)

Score Range 450 - 499

4B - VERY HIGH RISK (Score Class)

Score Range 500 - 559

4A - HIGH RISK (Score Class)

Score Range 560 - 629

3 - LOW TO MODERATE RISK (Score Class)

Score Range 630 - 699

2 - LOW RISK (Score Class)

Score Range 700 - 759

1 - VERY LOW RISK (Score Class)

Score Range 760 - 850

570-619 credit score

Scores between________ are considered higher risk, and will immediately take you out of the running for some types of loans.

types of credit used

Ten percent of your FICO score is based on the type of credit you use. Lenders like to see a mix of card accounts, because statistics have shown that having too many accounts of the same type slightly increases the risk of a person not being able to make timely payments.

number of new accounts

Ten percent of your FICO score is determined by the ____________________ you open. Opening a new account temporarily lowers your credit score for 12 months.

a previous marriage (non-conforming lenders)

The ____________ lenders will normally accept the divorce decree.

Car payment and installment loans (non-conforming)

The __________________mortgages allow these and again the rate depends on how many late payments you have had.

Repossession Credit Guidelines

The credit guidelines on this are about the same as a foreclosure except that it cannot have a deficiency balance for a conforming loan.

999 (Score Description)

The firm has fewer than 3 trade experiences within the last 12 months

Score Commentary

The score includes up to 3 score factors that provide the most significant negative factors that lower the firms score.

Predictive Data

The score leverages 12 months of historical trade data to predict future behavior; including aging dollars, percentage, business credit tenure and historical aging trends. In the development of the model, over 1,000 predictive attributes were considered with the final models including between 28 and 35 unique variables.

Predictive Variables

Total Dollar Balance Total dollar amount and percentage of balance that is current, past due, 60+ days past due and 90+ days past due. Maximum balance over the previous 12 months that is current, past due, 60+ days past due and 90+ days past due. Standard deviation in current and past due balances. Business Tenure on the database. "Age of oldest credit" Business location (State).

Inaccurate Information includes:

Wrong Name and Social Security Number and Birthdate Late Payments Bankruptcy Collections/Charge Off Medical Student Loans Jr / Sr Account Discrepancies Credit Card Limits (many banks have reduced them without reason)

Revolving accounts or credit cards

You must not have any 60 day "lates" No more than two 30 day "lates" for a conforming loan.

Purchasing a home or refinancing an existing mortgage

You'll want to know the base FICO® Score versions previous to FICO® Score 8, as these are the scores used in the majority of mortgage-related credit evaluations.

Capacity

is assessed by weighing a borrower's earning ability and the likelihood of continuing income against the amount of debt the borrower carries at the time the application for credit is made. While capacity may be considered in a credit decision, the credit report does not contain information about earning ability or the likelihood of continuing income.

Chapter 11 Bankruptcy

is usually used for the reorganization of a financially troubled business. Used as an alternative to liquidation under Chapter 7. The U.S. Supreme Court has held that an individual may also use Chapter 11.

Financing a new car

know your FICO® Auto Scores, the industry specific scores used in the majority of auto financing-related credit evaluations. They are also called auto enhanced credit scores.

Applying for a credit card

know your FICO® Bankcard Scores or FICO® Score 8, the score versions used by many credit card issuers.

Foreclosures Credit Guidelines (Non-conforming)

____________ lenders do vary but will normally require a substantial down payment if it is less than 3 years old.

Revolving accounts or credit cards (Non-conforming loans)

_______________ loans do allow them and again the rate is dependent on the number.

Collections, Judgments, and Liens (FHA)

______will sometimes make an exception on the length of time or if they are on a current payment plan in which case all other things must be good.

Chapter 12 Bankruptcy

adopted to address the financial crisis of the nation's farming community. Cases under this chapter are administered like Chapter 11 cases, but with special protections to meet the special conditions of family farm operations.

A score of 640

and above will get you into a conventional conforming loan with the lowest rates available (Fannie Mae and Freddie Mac). These rates are 1% above the 10 year T-Bill. Credit scores above ________ will get you the best rates in this market which is 1 to 2 points higher than the conforming market, depending on the type of loan you are getting.

Base FICO® Scores, such as FICO® Score 8

are designed to predict the likelihood of not paying as agreed in the future on any credit obligation, whether it's a mortgage, credit card, student loan or other credit product.

Foreclosures and Deed in Lieu

are reported as Foreclosures - 200 points - but you can qualify for a new mortgage soon after 2 years subject to credit score.

credit freeze

can also control who has access to your credit report by requesting a _______Just contact each credit reporting bureau separately and follow their credit freeze rules. Then no one can access your credit files without your permission.

New Credit

cost you 10-20 points during the first 60-90 days Inquiries = hard inquiries are new account inquiries there is impact Soft inquiries are existing accounts - no impact Promotional Credit Card inquiries have no impact

Scores from 580 to 639

could put you as much as 3 to 4 points higher in rate, and you can still qualify for a zero down program.

Step 2—Control Your Use of Available Credit

if you have only one or two revolving accounts and you're running above 30 percent on either or both, consider opening another account or two. the positive effect of getting your cards below 30 percent should outweigh any negative effect resulting from a new account.

Chapter 13 Bankruptcy

in which debtors repay debts according to a plan accepted by the debtor, the creditors and the court. Plan payments usually come from the debtor's future income and are paid to creditors through the court system and the bankruptcy trustee.

Revolving accounts

include all basic credit card accounts, both general and store cards along with home equity lines of credit.

Installment accounts

include auto, mortgage, home equity and student loans.

Open Accounts

include home utility, internet, cable, and cell phone service accounts.

Industry-specific FICO® Scores

incorporate the predictive power of base FICO®Scores while also providing lenders a further-refined credit risk assessment tailored to the type of credit the consumer is seeking

Bankruptcy Credit Guideline (Non-conforming)

lender requirements vary quite a bit. As a general rule they do want to see reestablished credit unless you are putting 20% down. There are some lenders that will lend with one day out of discharge.

Repossession Credit Guidelines (non-conforming)

market doesn't care about the balance if it is more than three years old and again, their credit guidelines vary from one lender to another.

Student Loan Credit Guidelines (non-conforming)

market generally does not care about them at all except in extreme cases to the tune of $50k or more.

Bucketing, Rebucketing

moving from one category to another, and your score may change suddenly without anything actually changing in your credit. The change can be either positive or negative. It's not unheard of for people to lose or gain up to 80 points over nigh just because they had moved to a different category

Car payment and installment loans

no 60 day late payments no more than one 30 day late to get a conforming mortgage.

Chapter 7 Bankruptcy

provides for court administered liquidation of the assets of a financially troubled individual or business.

Bankruptcy Credit Guidelines (Mae and Freddie)

require 4 years from discharge date. Your credit score is very important on these programs.

Bankruptcy Credit Guidelines (FHA)

requires 2 years and a good excuse, and reestablished credit. You can Qualify for an ________loan if you are still in chapter 13 (for at least a year) have been paying on time through the courts, and you get court approval which does happen often!

Collections, Judgments, and Liens (Non-conforming loans)

the ___________ market does not care if they are paid off or not as long as they do not impact title. Some _____________ lenders want them paid off if they are over a certain amount.

Underwriters look at

the last 7 years and if there are no Glaring issues such as bankruptcies or collections or judgments they are most concerned with the last two years. Note: Your payment history contributes about 35% towards your overall credit score but history is also a credit guideline factor on its own.

Scores below 560

will need at least 20% down and the rate will be 4 or more points higher.

a previous marriage FHA

will sometimes make a wavier if you can show the divorce decree that states it is the other parties' responsibility term-59and all other things are good.

Broker

you need a ___________to sort out the details for you. Guess what, that's free, and no obligation. They will look at your entire portfolio and if they can't get you in something now, they will counsel you on the steps you need to take to get in a loan later. Be sure you seek out a broker that has ALL the products on the market including FHA.

Foreclosures Credit Guidelines

your primary residence must be at least three years old and have been caused by circumstances out of your control: such as, death of the primary wage earner, layoff, or long term serious illness.