How Credit Really Works…

Has This Ever Happened to You?

You’re buying a car at a dealership.  They tell you that your Fico score is 800+ and you will get the lowest rate possible.  You order your credit report on Credit Karma and your Fico Score is 820.  Then its time to apply for a home loan and after running the credit the lender tells you, your Fico score is 720.   Why is it lower?

Do you Know Why?

Not all credit reports are created equal!  There are over 70 different credit reports that have different underwriting criteria.  This helps banks, creditors and in some cases employer make credit decisions about someone.  Better yet, they help the creditor determine someone’s financial means and their ability to pay debt on a monthly basis and/or pay debt off over time.

You Fico Scores Tell Creditors about You…

  • Do you pay your bills on time?
  • Can you afford the loan you are trying to get?
  • Do you miss payments?
  • Will you make your payments on time, every 1st of the month?
  • Can I trust you?
  • Hold a credit card balance?
  • Have established credit or not enough?
  • Any credit or mechanics liens?
  • Do you have tax liens?
  • Can you afford a credit card with a $50,000 credit limit? A 100k limit? $1m limit?
  • Will you pay me back?
  • Should I charge you a higher rate for having a lower credit score?
  • Do you qualify for the loan program?

These are just some of the questions, credit scores answer for lenders trying to make a decision to loan to you or not.

Why are They different?  

Is it being used to obtain a credit card with a credit limit of $5000 or a home loan in the amount of $2 million?  The risk associated with having a larger loan is greater.  The underwriting and qualifications are stricter and more conservative and one’s Fico scores tend to be lower.  This is the reason for the disparity of  FICO scores, from one credit report to another report.

In Summary…

If you are finding your scores are low and your looking for ways to improve them, we are experts in not only lending, but experts in credit!  We have helped 100’s of clients that got turned down by banks with poor credit and have helped them clean up their credit and obtain financing to buy or refinance property.

For more info, please contact me.