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FICO® Score - a Brief Explanation

When you apply for a mortgage loan, you expect your lender to pull a credit report and look at whether you’ve made your payments on time. What you may not expect is that they seem to be more interested in your FICO® score.

“What’s a FICO® score?” is a common reaction.

Each time your credit report is pulled, it is run through a computer program with a built-in scorecard. Points are awarded or deducted based on certain items such as how long you have had credit cards, whether you make your payments on time, if your credit balances are near maximum, and assorted other variables. When the credit report prints in your lender’s office, the total score is displayed. Your score can be anywhere between the high 300’s and the low 850’s.

Lenders wanted to determine if there was any relationship between these credit scores and whether borrowers made their payments on time, so they did a study. The study showed that borrowers with scores above 680 almost always made their payments on time. Borrowers with scores below 600 seemed fairly certain to develop problems.

As a result, credit scoring became a more important factor in approving mortgage loans. Credit scores also made it easier to develop artificial intelligence computer programs that could make a “yes” decision for loans that should obviously be approved. Nowadays, a computer and not a person may have actually approved your mortgage.

In short, lower credit scores require a more thorough review than higher scores. Often, mortgage lenders will not even consider a score below 600.

Some of the things that affect your FICO score are:

  • Delinquencies
  • Too many accounts opened within the last twelve months
  • Short credit history
  • Balances on revolving credit are near the maximum limits
  • Public records, such as tax liens, judgments, or bankruptcies
  • No recent credit card balances
  • Too many recent credit inquiries
  • Too few revolving accounts
  • Too many revolving accounts

FICO® actually stands for Fair Isaac and Company, which is the company used by the Experian (formerly TRW) credit bureau to calculate credit scores. Trans-Union and Equifax are two other credit bureaus who also provide credit scores.

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Testimonials

5/18/2016 Aloha Lance! Thank you all for your “local kine” support of the Big Island Chocolate Festival this year. It was really very successful and your support helped us keep the ball rolling as we brought tickets in. I will let you know how much was raised for the schools, but wanted you to see this online news story that mentions your sponsorship. Hawaii 24/7 has quite a large readership. Thanks again! http://www.hawaii247.com/2016/05/15/big-island-chocolate-festival-names-top-confections/ Julie Ziemelis-Owner Ziemelis Communications Integrated Communications Expert-PR
2/29/2016 In 15+ years of Hawaii Mortgage Company dealing with thousands of realtors, it is very rare when you come upon agents who really care and love what they do and want to make the transaction as wonderful as possible for all parties involved. Lance and Kimi go above and beyond for their clients and the mortgage professionals (like us!) who they are working with. In a world full of mortgage regulations, Lance and Kimi make sure to keep everyone on track of the timelines to ensure closing on time, which benefits both the sellers and buyers. We are lucky to work with them and look forward to many more transactions together in the future! Maura K. Shannon Manager / Mortgage Loan Originator NMLS #339190 Hawaii Mortgage Company NMLS #232582 443 Portlock Road Honolulu, Hawaii 96825 Tel: 808-988-6622 Fax: 808-988-7722 Maura K. Shannon
1/18/2016 I recently referred a client to Lance and he was spectacular. I refer a lot of agents outside of my market and Lance has by far been the most impressive I've ever had the pleasure to recommend. He has his thumb on the market and he is a master communicator. He is extremely good with follow up and he is one step ahead; just as you are thinking you want to reach out to check in with him, you'll find an email with an update answering the questions you hadn't even asked yet. He is everything you'd expect in a high performing professional and more. Plus his great personality makes him fun to work with. I'm truly impressed beyond all expectations. Jana S. Realtor Seattle WA.
10/14/2015 Lance Owens is the one of the best realtors in Kona. He has done a couple of my real estate purchases and is always above board on expectations and knows the Kona market as well as anyone. He has helped tremendously in getting the right deal at the right price. He is always available and very generous with his time, a gift when you are as busy as he is. Lance is trustworthy to handle your biggest investment. Bop P. Tampa, Florida
10/7/2015 I have personally known Lance for over 20 years... Even before he became a realtor! Lance is not your typical realtor. His ethics, integrity and work ethic are second to none. He and his partner Kimi are dedicated to work hard on your behalf... Not just out to get a commission! I would recommend Lance if you really want to get the best offer on your property and I would definitely use him again as my real estate agent!!! You will not be disappointed! I give Lance & Kimi 10 stars! Vicki Y. Honolulu, HI
Lance gives 100% always...we were lucky and grateful to be able to work with him several times! We liked the fact that he is honest, trustworthy, & always looking out for the best interests of his clients. At times the buying or selling process of a home can be a headache. Lance always has a demeanor that seems to make any situation positive. He exceeded our expectations and along the way gained our friendship. We would recommend Lance to our family and friends any day!!! Thanks ---Lance!!! :) C&D L H.O.V.E. HI
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