FICO scores, what they are and what they mean to you – Trinity Funding, Inc.

Scoring your Credit - How's your FICO?

In today's increasingly automated society, it should come as no surprise that when you apply for a mortgage, your ability to pay can be reduced to a single number. All the years you've been paying your mortgage, car payments, and credit card bills can be analyzed, sliced, diced, spindled and mutilated into a single indicator of whether you're likely to meet your future obligations.

All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The best known is called the FICO score, based on a model developed by Fair Isaac and Company (hence the name) and used by Experian. Equifax's model is called BEACON, while TransUnion uses EMPIRICA. While each of the models considers a range of data available in your credit report, the primary factors are:

Credit History - How long have you had credit?
Payment History - Do you pay your bills on time?
Credit Card Balances - How much do you owe on how many accounts?
Credit Inquiries - How many times have you had your credit checked?

Each of these, and other items, are assigned a value and a weight. The results are added up and distilled into a single number. FICO scores range from 300 to 850, with higher being better. Typical home buyers likely find their scores falling between 600 and 850.

FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.

What can you do about your FICO score? Unfortunately, not much. Since the score is based on a lifetime of credit history, it is difficult to make a significant change in the number with quick fixes. The most important thing is to know your FICO score and to ensure that your credit history is correct. Conveniently, Fair Isaac has created a web site (www.myFICO.com) that let's you do just that. For a reasonable fee, you can quickly get your FICO score from all three reporting agencies, along with your credit report. Also available is some helpful information and tools that help you analyze what actions might have the greatest impact on your FICO score. Each of the credit services offers similar services on their web sites: www.equifax.com, www.experian.com, and www.transunion.com.

Armed with this information, you will be a more informed consumer and better positioned to obtain the most favorable mortgage available to you.

Peter Ma is licensed under the laws of the State of Texas and by State Law is subject to Regulatory oversight by The Department of Savings and Mortgage Lending, any consumer wishing to file a compliant against Peter Ma should complete, sign, and send a complaint form to The Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78705. Complaint forms and instructions may be downloaded and printed from the Department web site located at www.sml.state.tx.us or obtained from the Department upon request by mail at the address above, by telephone at its toll-free consumer hotline at 1-877-276-5550, by fax at (512)475-1360, or by e-mail at smlinfo@sml,state.tx.us.

The Department maintains the mortgage broker recovery fund to make payments of certain types of judgements against a mortgage broker or loan officer. Not all claims are compensable and a court must order the payment of a claim from the recovery fund before the Department may pay a claim. For more information about the recovery fund, please consult Subchapter F of The Mortgage Broker License Act on the Department's web site referenced above.