Monday, October 5, 2009

Demystifying Credit Scores - Updated 11/29

Recently, I had the opportunity to participate in a conference call with Dave Wheeler from Credit Plus. Credit Plus is a credit scoring company that supplies information to mortgage lenders. In other words, Dave is "the man" (or one of them) that creates, interprets and manipulates the credit scoring model.

During our conference call, he demystified many things for me, that I would like to pass along to you... it was a lot of information, so I have broken up these topics into a series of mini-posts for your easy reference.

Part 4:  So What? - UPDATED 11/29

These posts answer 90% of all the questions I get about credit scores.  Hopefully, they will help you understand how your creditors are viewing your credit.  Please keep in mind in the last 18 months, the credit scoring model has changed THREE TIMES.  So, this is an ever evolving industry.  However, the basic principles have remained constant for some time now. 

November 29, 2009:  The chart shown is copied from an article on by Jeremy Simon, based on NEW information just revealed from FICO.  FICO will be releasing even more information which will be available on their web site this weekend. 
If you're thinking of buying, I encourage you to start looking into your credit, but also to contact a mortgage lender who can further assist you.  Credit reports are not the only thing that lenders consider, so beware.  Do not spend every dollar you have to pay down existing debt... sometimes you'd be better off having some cash on hand.  Let them help you look at the big picture.  I actually suggest you start thinking about financing as much as 6 months to a year before you plan to buy.  For a referral to a trusted lender, contact me today!
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