About Your Credit.
To successfully gain homeownership, it’s important to understand your credit and how to repair it be prepared to get your home. Here is some great information to understand more about credit scores, and how it can affect your ability to purchase the home you want. We also give you pointers on how to improve your credit score and understand your credit file easily.
To Understand Your Credit First Let’s Understand Who Are the Credit Reporting Agencies
Below are the three agencies that the credit bureaus report to. Credit reporting agencies are companies that gather information on consumers who use credit cards and sell that information in the form of credit reports to grantors, such as banks, finance companies, and retailers. Credit bureaus keep records of consumer debt and how regularly these debts are repaid. They gather information from creditors who send payment data to credit bureaus, usually monthly, showing what each account-holder owes or has paid. The data show
if payments are up to date or overdue and if any action has been taken to collect overdue bills. The credit bureau adds this data to existing information in consumer files, creating a history of activity on consumer accounts.
What is credit scoring and how do I read my score?
Credit scoring is a method of measuring the likelihood that an individual will repay a credit obligation as agreed. In other words, it is a numerical representation of “What’s the probability that the lender will get its money back, on time, as agreed, and in full?” To maintain a good credit score, a consumer needs to show that he/she can be responsible for someone else’s money.
To begin, you should understand that there is no quick fix for a poor credit score. Scores reflect credit payment patterns over time with more of an emphasis on recently reported information than older information. Be very cautious of any person or company that promises, for a fee, to quickly “repair” your credit.
How is a FICO score made up?
Lenders typically use FICO scoring model. Scores range from 300 – 900. The higher the score the lower the risk.
Credit scorers use the following factors to calculate
your FICO score:
30%-The Amount You Owe
35%-Your Payment History
10%-Your Credit Mix
15%-The Length of Your Credit History