1. Raising Your Credit Score
Building Credit
Raising Your Credit Score
(office)
(fax)
Mark Hairston
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2. Credit Score Defined
A statistical model that evaluates and compares credit data from millions of consumers which in turn applied complex mathematical formulas to determine whether a consumer will default on their loan obligation in the future.
There are multiple Scoring Models for each Bureau.
The Models are applied to a consumer’s credit data within the particular bureau to try to determine whether a consumer will be a good payer or a bad payer.

3. What The Score Means Each score is specific for each Bureau.
Score predicts chances of default.
Scores range from 300 to 850 for Classic FICO, for NextGen.

4. What The Score Means
The higher the score the less the odds of default.
The score is generated by analyzing the information contained in the consumer’s credit report at THAT point in time.
Credit scoring software has no memory.

5. What The Score Means
Odds of a Consumer becoming 90 days late or more on a loan:
SCORE
Above 800
Below 500
ODDS
1292:1
597:1
323:1
123:1
55:1
38:1
26:1
8:1
Live with Parents!

6. Scoring Statistics
Home Financing: 30 Year Fixed with a loan principal amount of $150,000
FICO
Score
720-+
APR
Rate
5.986%
6.523%
7.673%
8.452%
9.234%
Monthly
Payment
$898
$950
$1,067
$1,148
$1,232
Interest
Paid
$173,271
$192,134
$233,378
$263,378
$293,619
If your FICO score ranges between , you could benefit by improving your credit profile.

7. Your Score and Saving Money
How improving your credit score could save you money.
If your score improves to , you could save an additional $124,672
If your score improves to , you could save an additional $120,347
If your score improves to , you could save an additional $101,485
If your score improves to , you could save an additional $

8. Factors Determining Your Score
The more recent the delinquency, the more of a negative effect
Date of last activity determines score effect
Pay-off collections in escrow, not before
Past due’s destroy a score. Bring current immediately
30 days late last month worse then 90 days 3 years ago
Paying a charge-off or a lien won’t help or hurt unless it occurred within past 24 months
Negative information not considered in the score during an investigation

9. Factors Determining Your Score
Make sure your credit limit is being reported.
Do not close credit cards except in certain circumstances.
Share outstanding debt among many cards. Below 40% of credit limit on ALL cards.
Keep credit separate from spouse –
One maxed, both maxed
One delinquent, both delinquent

10. Factors Determining Your Score
Past delinquency
The way credit has been used
Age of the credit file
Number of times a person asks for credit
Your mix of credit

11. Reason Codes Ranked in order of importance
Shows where consumer lacks in scoring categories
Identify items in report and try to remedy
Don’t only focus on late payments when trying to increase your score
Codes are a number or a letter followed by a brief description

12. Credit Score Weights 35% payment history, collections, public records
More recent, more negative effect
More derogatory, more negative effect
Weight given pertaining to derogatory information (serious delinquency, charge-off, repossession, foreclosure & bankruptcy.)
Missing high payments

13. Credit Score Weights 30% outstanding balances carried on account
Ideally should be below 10%
Better to spread over a few cards rather than on one card
Get letters from creditor faxed stating balance
Don’t pay off while 30 days late, may not update
Score does not distinguish between business and personal cards
An authorized user is treated as if it’s a joint account

14. Credit Score Weights 15% length of credit history
Hold onto old credit cards, even if rate is not great.
The longer the history the better
Children should piggyback off parents cards

15. Credit Score Weights 10% types of credit
3 to 5 revolving credit cards is optimal
Mortgage Account raises score
Car loan raises score
News credit temporarily decreases the score of a month unless unrated status goes away
Equity lines of credit are treated as credit cards when the amount is low.

16. Credit Score Weights 10% Inquiries
Multiple auto/mortgage inquiries treated as one inquiry if within 14 days of each other
Inquiries affect the score for one year
Score is only reduced for the first ten inquiries
Personal, promotional, insurance and account review inquiries don’t count
Inquiries can cost between 2-50 points on score
30 day buffer period before mortgage and auto inquiries count

17. Credit Score Weights Recap
35% Payment history, collections, public records
30% Outstanding balances being carried on account
15% Length of credit history
10% Types of credit
10% Inquiries

18. Don’t Let A Credit Score Be An Obstacle
Get an annual FREE credit report to review your account and correct inaccuracies
Each score is specific for each bureau and the median score is used
TransUnion
Fair Issaic
Equafax
Send explanation letters to fix inaccuracies
Ask for credit limit increases every 6 months

19. Minimum Scoring Criteria for Traditional FICO
At least one trade line updated in past 6 months
In existence for at least six months on report for score to generate
Collection does not count

20. How To Build Credit Authorized User Deposit $1000 in savings account
Ask for loan and use balance to secure
Take that loan money and go to a new bank
Wait six months, apply for gas card

21. Increase Your Credit Score
Pay off Credit Cards but do not close
Ask for credit line increases
Ask lenders for courtesy adjustment
Make sure limit is being reported
Hold onto old credit cards
Get a mortgage
Spread balances evenly
Apply for as little credit as possible

22. Alternative Sources of Credit
Payment history from Rentals
Payment history from Telephones
Payment history from Utilities
Membership payment history
Checking and debit activity
Deposit activity
Number of Bounced Checks
Payroll Advances

23. Mortgage Services All Closings Attended
Network of lenders to guarantee the most competitive rates
Team of professionals who fully supports you and will guide you through every step of the loan process

24. Questions? Mark Hairston 512-472-3500 mark@mortgagesourceoftexas.com
Call or me today
for answers to your loan questions!
I’m here to help you get the home of your dreams…
Mortgage Consultant
Mark Hairston