Credit reporting companies give us enough BASIC information so that we know how they come up with scores that they post about you and your credit history.
Basic info from myFICO says that this is how scores are calculated:
- 35% Payment history
- 30% Amounts owed
- 15% Length of Credit History
- 10% New Credit
- 10% Types of Credit used
The problem is that it’s not an exact science and we can’t tell you to do X and Y and then your scores will go up exactly 53 point (for example). A smart “mortgage guy” will know just enough to be dangerous and they probably understand enough of these above basics to help put someone with “bruised credit” onto the path of enlightenment. Just a few suggestions can sometimes get someone either to the point of getting a mortgage if their score was too low or getting a better rate within 60-180 days (depending on how much bruising there was). Sometimes it just HAS to take longer to establish more history on someone’s credit who has been “cash and carry” for a long time.
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The last home shoppers who I sat down with after hours and reviewed their credit reports line were very appreciative. After going through their reports line by line and suggesting some things… the question of “will that get my score up the 53 points I need in 60 days?”. I had to explain that the reason that I believe that the 3 credit reporting agencies don’t want consumers to know more information than the vague information that they provide to the public is… they don’t want us to understand it so in depth that we can manipulate scores easily.
Then I explained that you need to keep your balances low, make your payments on time and just basically “use credit wisely” and your scores will go up.
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He looked at his wife, then back at me, then back at her and said… “So my credit score is kinda like my wife right?” He went on to say “I’m reading Men are from Mars and Women are from Venus and I see the comparison that I really have no idea what is going on inside her brain and what makes her tick; like how scores are calculated right? Yet, I also know that if I listen to her and basically just treat her nice… she’ll be nice to me. Similar to my scores going up if I make payments on time and keep balances low.”
I looked at him and simply said… “Um, yeah... Exactly like that”.
Questions on your credit and what it may take to buy a new house... contact me.
Steven Brand - 612-386-5306
Your Favorite Mortgage Guy.com
