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What’s a Credit Score?

Credit scores measure the risk of defaulting on a loan. When you apply for a mortgage, the mortgage company will measure how likely you are to default based on established criteria and then make a decision if they think you’re worth the risk. Here are the 7 factors that affect your score:File:Credit-cards.jpg

  1. Loan repayment behavior –  Have you paid back loans on time, or have you made late payments or missed payments.
  2. Credit score inquiries or requests for credit – When you check your credit, counter-intuitively, your credit score goes down. Applying for a loan also reduces your credit score. Save those inquiries and loan applications for when you need it.
  3. Delinquency – If you’ve defaulted on a loan, your credit score will drop.
  4. Length of established credit – If you’ve never had a credit card or a loan before, you is less likely to have a high credit score. Having a credit card, and paying the balance every month, boosts your credit score a little bit each year.
  5. Composition of credit – Revolving debt, such as with credit cards, affects your credit score differently than a loan that you pay back in installments. A variety of types of cards will benefit your credit score.
  6. Quantity of credit already available – The more you can borrow, the higher your credit score.
  7. Amount of outstanding loans – If you already have debt, you’re less likely to qualify for more debt.

The most widely used credit score in the United States is the FICO score. FICO is named for the Fair Isaac Corporation.

The FICO score is calculated according to the following categories:

  •  Payment history                35%
  • Amounts owed                   30%File:Credit-score-chart.svg
  • Length of credit history       15%
  • New credit                         10%
  • Types of credit in use          10%

FICO scores range from 300 to 850.

For more information on mortgages and credit:

What’s it cost?

Dear TZ – What are these mortgage acronyms?

Closing Costs Down!

Short Sale No More!

Mortgage Rates Still Dropping!

3 Choices when you Refinance Your Mortgage

Happy 2012!

Mythical King Janus, depicted with two heads on ancient Roman calendars, could look forward and backward and therefore became the symbol of resolutions. It’s no coincidence that January was named for King Janus.

If you’re anything like me, your New Year’s resolutions are usually the same thing – lose weight, spend more quality time with the family, blah blah. In fact, here are the top 10 New Year’s resolutions, according to USA.gov:

Quirckology.com  says that only 12% of people who make resolutions actually achieve them.  Forbes.com has these suggestions to help keep your resolutions:
  1. Choose resolutions that will make you happier – fix something negative or add something positive.
  2. Choose concrete, measurable actions to bring change.
  3. Start small. Be realistic about how much you can achieve in a small period of time and then make small consistent steps.
  4. Hold yourself accountable.  Keep a food, budget, or fitness diary if those are your goals. Join with others and help keep each other accountable. The Happiness Project is one way to connect with people traveling your same path.
And so, we wish you a joyous, prosperous, and healthy New Year and we look forward to continuing our conversations with you in 2012!

Should auld acquaintance be forgot, and never brought to mind? 
Should auld acquaintance be forgot and days of auld lang syne?

For auld lang syne, my dear, for auld lang syne, 
We’ll take a cup o’ kindness yet for auld lang syne.


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