EXIT Realty Foothills Explains FICO Scores

FOR IMMEDIATE RELEASE

Contact:
Jessie Eide
Realtor
EXIT Realty Foothills
909.593.0502
jessiepd@yahoo.com

EXIT Realty Foothills Explains FICO Scores

The FICO Score

La Verne , CA (Grassroots Newswire) 8/19/2010 -- Mortgage lenders determine a homebuyer’s creditworthiness by using the Fair Isaac Company (FICO) scoring system. A homebuyer’s creditworthiness sets the bar for whether and how much a lender is willing to lend and at what rate. The FICO score range is from 300-850.

The effects of mortgage inquiries

Two kinds of inquiries exist:

• soft inquiries, which include self-run credit inquiries; and. -
• hard inquiries run in connection with applications for credit, including those mortgage loan pre-approvals which entail a credit check.

Only hard inquiries drop FICO credit scores, and do so in the range of anywhere from 0 to 8 points.

The effects of mortgage delinquencies

30-day mortgage delinquencies, like other credit delinquencies, stay on a homeowner’s file for seven years, and initially might reduce a score by between 60-110 points. For 60-day or 90-day delinquencies, the credit ding migrates to a range closer to that of foreclosure detailed below.

The effects of a loan modification

A loan modification reduces credit scores, but a pre-established point drop is impossible to determine as the calculation of the ding depends on how the lender decides to report the modification to the credit bureaus. Lenders require a mortgage be delinquent for 60 to 90 days before they will even consider a modification. Thus, by the time a lender has deigned to discuss, much less enter into a modification with a homeowner, the homeowner’s credit score has already been severely damaged by his lender requiring a mortgage delinquency ding as a prerequisite to loan workout discussions.

The effects of short sales, deeds-in-lieu and other foreclosure alternatives

Short sales, deeds-in-lieu and other foreclosure alternatives (separate from the loan modifications, as discussed above) are treated similarly to foreclosures. Here again, the FICO formula presently in place is incapable of differentiating any of these non-foreclosure events from an actual foreclosure sale — they are merely reported to bureaus by lenders as “not paid as agreed.”

The effects of foreclosure

Foreclosures stay on a homeowner’s credit bureau file for seven years, and can negatively impact a score between 85-160 points. However, if a homebuyer keeps his credit clean but for the mortgage default and foreclosure, his credit score will begin to rebound after as little as two years if timely payments are made on his other obligations. Further, lenders are overlooking these foreclosure-related mortgage issues when a prior owner seeks a home loan after two years if a 20% down payment is being made.

The effects of bankruptcies

Regardless of the type of bankruptcy petition filed, the reduction in the FICO score is the same – around 130-240 points. Chapter 13 bankruptcies stay on file for seven years, while Chapter 7 bankruptcies stay on file for ten years. The higher the score, the greater the point ding.

EXIT Realty provides sales associates with residual income over and above their own transactions and an enhanced retirement and beneficiary benefit; all of which have been unheard of in the real estate industry until now.

For more information about EXIT Realty Foothills, please call 909.593.0502. EXIT Realty Foothills is located at 1339 Foothill Blvd, La Verne CA 91750.

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