Understanding Your Credit Score

One of the most talked-about, and least understood topics in our real estate world today is how Credit Scores are figured and how they work.

Very few of us understand how credit scores are weighted and calculated--though most of know that our credit scores can affect both if we get a mortgage loan, and what kind of rates we are going to receive. I won't pretend that I am an expert on credit scoring. However, I will say that a lot has been written on the subject.

You can do loads of research on this topic if you are of the mind to do so. There is no shortage of information on the net concerning these matters. And there are lots of people who will offer to help you increase your credit scores to "acceptable levels". In general, most lenders today are looking for a minimum credit score of 620 to 640. Likewise, premium A Paper Rates typically begin with a minimum 740 credit score. These standards frequently change, and each lender and their respective loan portfolios will also vary. So, call you mortgage lender and ask them what loans they offer and where you fall on their credit map.

If you want to read more, here are a few references for you to get started:

7 Credit Score Myths
FICO Score Forums
WSJ--Credit Scores: What you need to know.
Fair Isaac Corporation (they 'invented' FICO scores)
Wikipedia: FICO
BankRate--How Credit Scores Work


If, after reading this, you are still wondering which way is up, give me a call. I will put you in touch with lenders who can begin to help you un-bundle the mystery. I am Tim Thornton, your Austin Realtor.

Let's talk.

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