What is a FICO Score?
In 1958, Bill Fair and Earl Isaac, a mathematician and engineer, formed a company in San Rafael, California. They created tools to help risk managers make a better decision when taking financial risk. Today, 90 percent of all lenders use the FICO score, first created in 1989 by Fair Isaac, and it’s the only score Fannie Mae and Freddie Mac, the Federal Housing Agency and Veterans Affairs will accept in underwriting loans they guarantee.
How do I find my credit score and how do I clean it up?
How your credit score is calculated is the first step in understanding how to qualify for Boston condo loan. The FICO scoring system takes several key aspects of your credit file in order to come up with the number that the creditors use to approve or deny a mortgage (loan).
There are three creditors who report your financial history, it is possible that your credit score will vary among Equifax, Experian, and TransUnion.
Each one might come up with a different score. That’s why some lenders may approve you for a mortgage and another lender may deny you — they could be using different information pertaining to your credit history.
It’s important to check all three of your credit reports before you start your Boston condo search. Once you have the facts, you can develop a plan to get your finances back on track.
What Items Can Damage Your Credit Score?
There are three areas where your credit scores may be impacted, these common damaging items include:
- Collection Accounts
- Charge Off Accounts
As you can see by the charts below, there is wide room for improvement by getting inaccurate and damaging information off of your credit score, and the sooner, the better:
You’re entitled to free copies of your credit reports from Equifax, Experian, and TransUnion each and every year. You can’t dispute anything until you know what’s on there, so this is the absolute first step to cleaning up your credit. Go through each section and look for any potential red flags, including:
- Inaccurate personal information, such as your name or social security number
- Accounts that don’t actually belong to you
- Inaccurate account details, such as amounts owed or credit limits
- Missing information, such as closed accounts being listed as open
- Outdated information, such as negative items still listed after the seven- or ten-year limit
Determine Which Mistakes to Dispute and Gather Evidence
Any mistake can be disputed, especially if it’s hurting your credit score. Go through each of your credit reports and mark which ones you want to challenge.
You can contact a company like Sky Blue Credit Repair and have them help you with your dispute process, which can be especially beneficial if you feel overwhelmed or unsure of the process.
Once you clean up your credit report, contact us to start your home search.
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Updated: January 2018