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Category Archives: Credit Scores

Information about your credit score

Understanding Your FICO Score

Understanding Your FICO Score

In today’s environment of tighter lending standards, it’s more important than ever to handle money and credit intelligently and carefully.understanding your FICO Score Although credit scores are not the only determining factor in deciding the credit-worthiness of a borrower, they are an important part of the process. Good credit scores can mean a lower interest rate, which can save you money on your monthly mortgage. Having a good score also gives you many more options in loan products when you start the home buying process.

As well as mortgages, having a good credit score benefits you and several other ways:

  • Auto Financing is better
  • Renting is easier
  • Job Prospects… yes, potential employers can check your credit score
  • Obtaining other Loans
  • Major purchases, like appliances or furniture

What is a FICO Score?

A credit score, simply put, asks and answers the basic question of whether or not a borrower pays their bills. It helps lenders determine if a borrower is likely to pose any type of credit risk.

A FICO® score [FICO® – Fair Issac Corporation]  is a summary of an individual’s credit history from the three main credit bureaus:  Equifax, Experian and TransUnion. Each bureau collects data differently, so an average of all three is considered a fair assessment of credit-worthiness. FICO® Scores are calculated based solely on information in consumer credit reports maintained at the credit reporting agencies.

There are other credit-reporting companies, but FICO® is the most widely used, as 90% of top lenders use FICO® Scores to determine whether an individual is a good credit risk.

Understanding Your FICO Score

In the US FICO® scores range from 300 to 850. The average score is around 660 to 670, and is considered good credit. 749 and up qualifies as excellent credit and scores below 620 are seen as less-than good credit.

What Makes Up a Credit Score?

  • 35%:  Payment History, including on time pays and delinquencies; more weight is placed on recent payment history.
  • 30%:  Remaining debt capacity
  • 15%:  Length of credit history
  • 10%:  Accumulation of debt in last 12 to 18 months; number of inquiries; opening dates
  • 10%:  Mix of Credit:
    —  Installment, revolving and open accounts
    —  Number of finance company loans; the more the lower the score

A logical first step in home buying is to check your credit report and see where you stand. If your credit needs a little primping, most lenders have programs to help you work on your credit. Sometimes, in cases where the damage is great, a hopeful borrower might want to work with a credit specialist. [we know a great one!]

Keeping good credit is valuable even if you aren’t in the market to buy a home at the moment. Your interest rates on a car or other installment loan, as well as on credit cards will be lower with a good credit score, saving more of your hard-earned dollars every month.

Credit Scores and Mortgages

The most influential determinant of your ability to get a mortgage is your credit score. The higher the score, the more mortage options are available and the lower the interest rate, generally. A credit score of 740 or higher qualifies for the best interest rates from most lenders. Although you often read that you can get a mortgage with a score of 620, it’s very difficult. The bottom credit score for most mortgages is 640. It’s always wise to get your credit score to a minimum of 660, so that if any last-minute dings happen to your score, you’re still well above the minimum.

Between a minimum 640 and a healthy 740, the rates can vary as much as 1 1/2 points. In today’s mortgage rate climate that can be the difference between 4% and 5.5%. Consider the difference in monthly payments on a $200,000 home:

  • 4% rate = $954.83
  • 5% rate = $1073.64
  • 5 1/2% rate = $1,136

By taking the time to build a good credit score, you can end up saving as much as $181 each month. Over the 30 years of the loan that adds up to $65,160.

Extra Credit

  • – Consumer credit reporting companies are allowed, under FAIR Isaac laws, to sell name lists to other companies that, in turn, make offers of credit or insurance. These “Firm Offers” aren’t initiated by you, the consumer. This website is the place where you can opt-out from firm offers, as well as opt-in.
  • Federal law allows you to get a free copy of your credit report every 12 months from each credit reporting company. One place to get your free reports is Credit counselors advise consumers to get one free report every 4 months from one credit reporting company. With identity theft on the rise, it’s always good to check for errors.

Contact Us for a list of Preferred Frederick Lenders.

Chris Highland
eXp Realty

301-401-5519 Direct
410-777-5714 Broker

Don’ts And Do’s During the Loan Process

Don’ts And Do’s During the Loan Process

Do’s and Don’ts During the Loan Process

Between the time your offer on a home is ratified, becoming a contract, and the time you go to close on the home, this is the time your loan is in process.  You should not do anything that will have an adverse affect on your credit score. What kind of things have an adverse effect?  Glad you asked:
  • Don’t apply for new credit of any kind.  No credit cards or lines of credit.  No new car loans.  None of that.
  • Don’t pay off collections or charge-offs, unless your lender asks you to.  This is a hard one for people to accept.  Generally, paying off old collections causes a drop in your credit score.  When you do, it brings that particular account to the forefront of your credit.  In most cases, the older a ding on your credit is, the less negative affect it has. In many cases, paying an old charge-off makes it new again.Credit Score first time buyers
  • Don’t close credit card accounts.  If you close an account, it will affect your ratio of debt to available credit which has to be under a certain ratio.  This accounts for 30% of your credit score.  If you really want to close an account, do it after you close on your home.
  • Don’t max out or over charge existing credit cards.  Running up your credit cards is the fastest way to bring your score down; it can drop up to 100 points overnight.  You should try to keep your credit cards to below 30% of the available credit limit.
  • Don’t consolidate debt to one or two cards.  Again, you don’t want to change your ratio of debt to available credit.  You also want to keep your good credit history on the books.
  • Don’t raise red flags to the underwriter.  Don’t co-sign on another person’s loan, or change your name or address.  The less activity that occurs while your loan is in process… the better.

There are some things you should do while in the loan process:

  • Do join a credit watch program. Your bank, credit union or credit card company may be able to direct you to a free credit watch program that can alert you to any changes in your credit report.  This way, if something pops up, you can intervene before an underwriter sees the problem.
  • Do continue to use your credit as you normally would. Red flags are easily raised within the scoring system.  If it looks like you are changing from your normal spending patterns, it could possibly cause your score to go down.  Example:  if you’ve had a monthly service for internet access billed to the same credit card for the past 4 years, there’s really no reason to drop it now.  Again, make your changes after the closing.
  • Do stay current on existing accounts. Late payments on your existing mortgage, car payment, or anything else that can be reported to a credit reporting agency can cost you dearly.  One 30-day late payment can cost anywhere from 30 to 75 points on your credit score.
  • Do call your loan officer. If you receive notification from a collection agency or creditor that could potentially have an adverse affect on your credit score, call your Loan Officer so they can try to direct you to the right resources and prevent any negative reporting to the credit bureaus.

information provided by:


The Highland Group
Chris & Karen Highland * 301-401-5119   
eXp Realty – 410-777-5714

When the Mortgage Lender Says No

What to Do When the Lender Says “No”

Declined. It happens. It’s kind of a negative topic, but it is something that home buyers may deal with sometimes, especially in these days of tighter lending standards. The good news is that it isn’t a final sentence. It’s just a temporary situation that can be fixed.when the lender says no

There are many reasons why the lender says no to a buyer. Most of the time the reasons have to do with insufficient credit. Sometimes the Debt-to-Income Ratio is too high. Both of these situations can be fixed. Blair Warner, credit counselor with Upgrade My Credit, and I discuss “What to do when the lender says no,” in the following video:

Several Key Points:

1. Don’t get discouraged. You can spend a few months getting mortgage ready and be able to get back to searching for a home.

2. Most of the time the debt-to-income problem is due to credit card payments. The good news is that those are the easiest to take care of. They do need to be taken care of in a strategic way, guidance from a credit counselor or a lender is a good idea.

3. Mortgage underwriters look at the last 12 months of your credit history. Many times it really doesn’t take a long time to fix a low credit score.

4. It’s a good idea to check your credit report and know what your credit and debt situation is before you call a Realtor. Know what’s on your credit report.

5. If you don’t have enough credit, it can take longer to build it. FICO, the credit score company that most lenders use, needs to see a payment history.

6. When you get declined by a lender, it doesn’t mean you shouldn’t buy a house, it just means that you don’t fit in the box yet. Working with your lender or a credit counselor can help you get to the place where you meet the criteria and you will fit in the creditworthy box.

It’s not what you wanted to hear… but it happens. Sometimes it means fixing your credit, sometimes it means you need to lower your debt. Either way, it’s not a final judgement, just a hurdle. Don’t give up!

If you need professional credit services, contact Blair Warner – Upgrade My Credit,  817-886-0302, ext. 3


Keeping Track of Your Credit Score

Keeping Track of Your Credit Score

Keeping track of your credit score and understanding how it’s basically calculated can help you build a good score and maintain it. I recently attended a class with a lender and got some great information about credit scores. Here are my notes:

Credit Scores are made up of 5 sub-scores, which all need to be kept in good shape over time:credit score image

1.  Payment History …………..35%      Bills should be paid as agreed the most recent 6 months. The highest weight is put on the highest payments, mortgage, car payments, etc.

2.  Balances Carried …………..30%       Keep your balance to a ratio as low as possible.  Outstanding balances should be less than 30% of the available credit.  Over 50% is not so good. For example, if you have a credit card with a $3,000 limit, you shouldn’t have more than a $1,000 balance.  Spread the balances between cards, don’t have all the balance on one card with the others at zero.

3.  Credit History ………………15%         The longer the credit history the better.  Long credit history paid, as agreed has a positive impact on your credit score.  So don’t close old accounts, especially if they have a long history, that has a negative impact on credit score.

4.  Mix Of Accounts ……………10%         It is ideal to have installment and revolving accounts.  Mortgage loan, auto loan, 3 to 5 credit cards (more is ok, too), paid on time over 1 to 2 years.  A HELOC should be greater than $40,000 or it will report as a revolving account versus a mortgage. (You don’t have to have them all at once, however. A mix of credit accounts over the years is ideal)

5.  Inquiries ……………………..10%         If you are applying for a mortgage, you are allowed a number of credit inquiries for 14 days, after that inquiries can cause you to lose points.  Be aware that constantly applying for credit will cause a lower score.  You are allowed to pull 1 credit report each year for your own knowledge, which is a good idea to keep aware of what is going on with your credit score.

Inquiries that don’t hurt the score:  Job related, insurance/utilities, account review, personal ( and pre-approved offers in the mail.

Blemished credit can be costly, low credit scores mean higher interest rates.  What can you do?

1.  Check your own credit score. Mistakes are made, and finding them can save you. Everyone has the right by law to challenge mistakes on their credit report. Keeping track of your credit score is important to catch mistakes.

2.  Pay past due accounts.  Past due accounts can include those that are 1 day late.  Past due accounts do not include judgements and collection accounts.

3.  Get rid of late payments.  Have them removed by phoning your creditor and requesting late payments be removed.  You must be persistent and work your way up the ladder to someone who can help you.  Always get a letter that documents: Name/address/account number, specific late payment to be removed, on company letterhead/signed by employee.

4.  Get your credit card balances down, try getting credit limits increased.  Every 6 months request an increase to your credit limit.  Have the creditor base the increase on your credit history.  However, if the creditor must pull credit, don’t, it will lower your credit score.

5.  Start or keep making payments on time.

6.  Do not close old accounts, this will hurt your score.  Use old accounts periodically, charge a small amount and pay it off immediately.  Don’t reply to pre-approved offers.  Don’t consolidate.

7. Consider using the services of a professional credit counselor if you need extra help improving your credit score. We know just the person to help!

If you wonder if it’s worth the trouble, think about this:  Increasing your credit score by 10 points will net interest savings of $100,000 over 30 years (on a $500,000 mortgage loan.)

It’s worth the trouble! Check out this table showing the impact of interest rates on your monthly payment

Chris & Karen Highland

eXp Realty 

First Time Buyers: How to Build a Credit Score That Lenders Will Love

First Time Buyers: How to Build a Credit Score That Lenders Will Love

Building A Credit Score

that lenders will love. If you plan to buy a house in the near future, or even in the not-so-near future, this short video is full of some great information that will set you on the right path to realizing your real estate goals.

First Time Buyers: How to Build a Credit Score That Lenders Will Love

Thanks to Blair Warner, Senior Credit Consultant of Upgrade My Credit for this informative video. Contact Blair Warner for further information and services. 817-886-0302. Blair can help buyers with their credit in all 50 states.

For more videos concerning your credit score, see our YouTube Channel playlist: Your Credit Score

Building a good credit score is one of the first places to start for the first time buyer. There are good practices to building a credit score that will allow you to get the best interest rates, and allow you the greatest amount of choices and buying power.

The real estate industry has changed a lot over the last decade, and your credit score and credit history are an increasingly important part of home buying. There are several types of credit, and all have their purposes at different times.

If you’ve faced any unfortunate circumstances that have negatively affected your credit score, you may want to consider professional help. Credit repair, credit enhancement and education about maintaining good credit are all available and have proven to be a big help to home buyers.

If you are looking to purchase a home in Central Maryland, the Highland Group is here to help first time buyers navigate the waters of real estate. Ask us about Buyer Representation.


Eight Credit Score Myths

Eight Credit Score Myths

Eight Credit Score Myths

The following eight credit score myths are video segments of a conversation I had with my friend, Blair Warner, a Credit Counselor with Upgrade My Credit. The credit score is a very important component of the overall creditworthiness of a buyer, and demands attention.

Myth: “I always pay with cash, my credit should be fine.”

Myth: Keeping a Low Credit Limit:  Good or Bad Idea?

(start at 30 seconds to skip intro)

Myth: “I’ve always gotten credit when I asked, my credit score should be fine”

(start at 17 seconds to skip intro)

Myth: “Closing out some credit cards will help my credit score.”

(start at 15 seconds to skip intro)

Myth: “Consolidating my credit will help raise my score.”

(start at 26 seconds to skip intro)

Myth: “Credit Inquiries will hurt my credit score.”

(start at 58 seconds to skip intro)

Myth: “It will take years to increase my credit score”

(start at 57 seconds to skip intro)

Myth: Late Payments, How They Affect Your Credit Score


To watch the original video, a 34 minute video, Eight Credit Score Myths:                             Credit Score Myths

The responsible use of debt is the theme of the discussion about credit. Lenders need to know that a buyer is creditworthy and has used credit in a responsible manner. When you’re starting from zero, it will take about 2 or 3 years to build the kind of credit score that will allow you to get a loan and get it with a good rate.

For more questions, visit Blair Warner’s website, Upgrade My Credit. For professional services, a credit specialist can really make a difference.

What Can I Do to Improve My Credit Score?

What Can I Do to Improve My Credit Score?


Credit scores change all the time to reflect your credit patterns.  Any time you check your credit score, it is like a snapshot of your score at one given moment in time.  Most of the time, a score doesn’t change much from month to month.

Credit Score BasicsIt is a good idea to check your score about every 6 months, and 6 months prior to buying a home.  That way, if you find your score is not what you’d like, you have several months to take steps to improve it, what is known as Credit Score Enhancement.

Although credit scoring models are complex and differ among creditors, there are some basic breakdowns of scoring:

  • 35% of your score is made up of your payment history.
  • 30% is made up of the amount owed.
  • 15% is made up of the length of credit history.
  • 10% is made up of new credit.
  • 10% is made up of the types of credit used.

1.  The best way to enhance your score is to pay your bills on time. Managing your credit well over a period of time is the best thing you can do. Most scoring models take into account how late a payment is, how recently the late payment occurred, and how many late payments there are in total.  Once you have a late payment, the damage is done.  The negative impact of the late payment will dissipate with time, and late payments involving smaller amounts are not as significant as those with larger amounts.

2.  Limit outstanding debt. (30%).  Most of the models take into consideration the ratio of the amount of debt to amount of credit. [debt/available credit] Ideally, you should keep that amount to 30% or lower.  The higher the ratio, the more negative the score.  Owing a lot of money on your accounts can indicate that you are over-extended.  Having a small balance and making the minimum payment is the way to show that you use credit responsibly, and is actually better than having no balance at all.  Check to make sure that your revolving accounts are reporting your credit; it does no good to have the credit if it is not being reported.

3.  Preserve the length of your credit history. (15%).  Don’t close unused accounts, because the length of your credit history is important.  An insufficient credit history can have a negative effect on your score.  Also, don’t open up new accounts rapidly, as this decreases the average age of your credit accounts, and it is considered risky behavior in most credit scoring models.  It’s good to keep and occasionally use old credit cards to maintain a good score.

4.  Avoid recent credit applications. (10%).  Every time someone makes an inquiry into your credit, as when you open a new account, it negatively affects your score.  (It doesn’t affect it if you look into your own credit.)  You should always read the fine print in ‘special’ credit offers, and if you have any question about the legitimacy, don’t accept it.  These solicitations are treated as ‘soft’ inquiries, which don’t affect your score; but when you accept the offer, it is treated as a ‘hard’ inquiry that is factored into the score.  Definitely, don’t apply for a card you don’t think you are likely to get.

5.  Manage the number and types of accounts you have. (10%)  Someone who has a lot of credit accounts could possibly be considered a higher risk than someone who has only some credit card debt.  The trick is to manage it wisely.  Too many credit accounts can have a negative affect on your score.  The ideal number of credit cards is usually considered to be 3 to 5.  If you have an unreasonable amount of credit cards, you may want to consider closing some… but do it wisely. You could affect the ratio between credit limit and available credit previously mentioned that will reduce your score. You could also negatively affect the length of credit by closing older accounts.

Generallly, a mix of credit cards, retail accounts, installment loans and mortgage loans results in a better score, but all are not necessary.  The lack of a mortgage, for instance, won’t negatively affect your score, but it will probably not be as high as it could be with one.  You should not go out and open accounts that you don’t have in an effort to increase the types of accounts.

There is Hope.  If you have less than desirable credit scores, don’t lose hope, there are definite things you can do to enhance your credit scores.  If you start practicing these good credit management tips now, you’ll most likely be in much better shape in 6 months, which is really not a long time.


Credit Score Myths

Credit Score Myths

Your Credit Score  

In the following video, I discuss myths about your credit score with Blair Warner, credit repair coach at Upgrade My Credit, a company which specializes in helping people with credit score repair and enhancement:

Credit Score Myths

There are several short videos on the Frederick Real Estate YouTube channel with tips for establishing and maintaining a good credit score. If you find that you are in need of professional services, feel free to contact Blair Warner at Upgrade My Credit. Blair has helped some of our clients with their credit score problems, and is a great resource!

Maintain A Good Credit Score

Maintaining a good credit score (above 700) can mean not only that you qualify for a mortgage, but that you can qualify for lower interest rates. Lower interest rates mean lower monthly mortgage payments, not to mention lower car payments, lower rates on credit cards, etc.

Contact Chris Highland, with the Highland Group for buyer agency in Frederick Md. 301-401-5119.

How to Repair Your Credit After A Short Sale

How to Repair Your Credit After A Short Sale

Credit Repair After A Short Sale

Although a foreclosure will do three times the damage, as much as 300 points worth, a short sale can decrease your score between 50 and 100 points, on average.

The good news – recovering from the short sale is much quicker and much easier than recovering from a foreclosure. Depending on the circumstances, credit repair after a short sale can take as little time as a year.

If you are recovering from a diminished credit score due to a short sale, or because of any other financial hardship you’ve faced, this video interview has some great tips and information. Blair Warner, credit coach and founder of “Upgrade My Credit” was kind enough to answer some questions about the credit process.

Repairing your credit after a short sale is very possible. If you need professional service to help you repair your credit, consider contacting:

Blair Warner, Upgrade My Credit

If you are facing a financial hardship and are in danger of foreclosure, contact The Highland Group, we may be able to help you avoid foreclosure. 301-401-5119.