FICO® Scores are used by virtually all lenders to make decisions about credit approvals, terms, and interest rates. There are five categories of credit data that make up this score and all are weighted differently:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
Let’s say you have a client that is interested in becoming a homeowner, but they don’t have the FICO®Score to qualify for a mortgage and no co-borrower/signor is available. Or, maybe you have someone who is interested in learning how to increase their score so they can take advantage of better rates and terms.
Here are some suggestions to help build a FICO®Score:
- Check all three credit reporting agencies for reporting errors and dispute inaccurate or missing information.
- Pay all bills on time. Even if your client has missed payments in the past, the longer they pay bills on time, the more their FICO® score increases.
- Reduce debt.
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- Keep balances low on credit cards – the rule of thumb is no more than 30% utilization of the available credit line
- Pay off debt
- Don’t close unused credit cards to raise scores
- Don’t open new credit cards if not needed
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- Reach out to a Key Mortgage loan officer. We can leverage our credit score tools to work with your client on increasing their FICO® score to put them in the best possible position when it comes time to make an offer.
If you have a client that needs support on increasing their credit score or if you would like to learn more about how to support your client so they can purchase a home, reach out to a Key Mortgage loan officer.
