How Your #CreditScores are Calculated

We still don’t know how credit is exactly calculated by the 3 bureaus (TransUnion, Experian and Equifax), because they will not release their algorithms. But they have given a percentage of how things are broken down:

– 35% Payment History:   This includes how many times you’ve been late on accounts, when the last late was and how severe you’ve allowed accounts to go delinquent.

– 30% Amounts Owed: Total amounts owed on all accounts as well as the difference between your balances and limits (utilization). People who max out their limits have a greater risk for default. If your accounts are over 50% of your limit, this will negatively affect your credit, and under 50% will start positively affecting your credit. Keep your balances as low as possible.

– 15% Length of Credit History: The bureaus want to see a long history of credit. If you have to close accounts, choose to keep the old ones open so you don’t lose all that history.

– 10% New Credit: New credit isn’t always a bad thing. Although it does affect your length of credit, it’s another account on your credit that can help improve your scores. Do not apply for a lot of new accounts at one time or your scores will be hit hard.

– 10% Types of Credit: The bureaus want to see a healthy mix of accounts. Have a balance of revolving credit like credit cards and installment loans like auto loans and mortgages.


Please do not hesitate to let me know if you have any questions, comments or referrals.

Your Lender for Life,


Opting Out of Credit Card Correspondence

I’ve seen opting out of prescreens improve a score from 2 to 20 points. Worth taking a look and opting out for the next 5 years.

Find Your Balance

iStock_000004015725XSmallHave you ever gone through your mail and chucked an unwanted credit card application in the trash? If so, you may have inadvertently created an opportunity for a thief to take over your financial identity. What may seem like a harmless disposal of junk mail could have a wide-ranging and very damaging impact. The good news is that there are some easy steps you can take to give yourself much greater information security.

Why is it so important?
Historically, credit card companies have sent out loads of unsolicited offers via mail with pitches like, “You’ve already been approved!” If you’re an adult with decent credit, chances are you’ve gotten a few of these pieces of correspondence. You may have even taken advantage of one of these offers. That’s not necessarily the problem.

The trouble can arise when someone else is trying to take advantage of these offers on your behalf…

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Debt-to-Income Ratios Can Derail Your Home Purchase

Great blog for first time homebuyers to better understand DTI qualifications.

Find Your Balance

162720557 You’ve got your down payment. Your credit score is fantastic. You’ve even figured out your monthly budget for housing expenses.

So now you’re ready to charge ahead into the home buying process, right? Maybe not. If you’ve overlooked your debt-to-income ratios, you might not be as mortgage-ready as you thought.

What are they?
As the name suggests, debt-to-income ratios (DTIs), are ways of measuring a person’s monthly debt payments as they relate to incoming cash.

There are two main types of debt-to-income ratios used by mortgage lenders. These are known as the front-end ratio and the back-end ratio. The front-end ratio measures monthly payments for only housing-related expenses, like mortgage principal, interest, taxes, mortgage insurance, homeowner’s insurance and HOA fees (if applicable).

The back-end ratio encompasses all debts that are currently or will be paid on a monthly basis, like the housing-related expenses, home equity loans, credit card minimums, student…

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