Credit Scores

How Credit Scoring Works

Credit scoring is a statistical method that lenders use to quickly and objectively assess the credit risk of a loan applicant. The score is a number that rates the likelihood you will pay back a loan. Scores range from 350 (high risk) to 950 (low risk). There are a few types of credit scores; the most widely used are FICO scores, which were developed by Fair Isaac & Company, Inc. for each of the credit reporting agencies  Credit scores only consider the information contained in your credit  profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status.
Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making  payments on time will raise your score. The most important factor for a good credit score is paying your bills on time. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you may want to: keep balances low on credit cards and other "revolving credit;" apply for and open new credit  accounts only as needed and pay off debt rather than moving it around. Also don't close unused cards as a short term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score. Your credit report must contain at least one account which has been open for six months or greater, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

Other Credit Factors We Consider

First Security Mortgage Corp. looks at other information besides your credit score. 
We also consider:

        Income stability

        Employment history

        Monthly debts in relation to your income

        Savings amount and methods

        Mortgage type

        Property type and value

        Down payment amount

        Timeliness of rent and utilities payments

How to Improve Your Credit Score

 If you have had credit problems, be prepared to discuss them honestly with us.  If you've had credit problems, we can be of assistance to you regardless of whether you are ready for a mortgage loan or not.  As always, before making a major financial decision, such as bankruptcy, consult a professional.

We are responsible mortgage professionals and know there can be legitimate reasons for credit problems, such as unemployment, illness or other
financial difficulties. If you had a problem that's been corrected and your payments have been on time for a year or more, your credit may be
considered satisfactory.

Helpful Tips:

Don't procrastinate. It's the day your payment is received that counts, not the postmark date. Give the post office sufficient time (five business
days is a good guideline) to deliver your mail. Late payments may mean late fees, higher interest, and/or a negative mark on your credit report.
Never send cash. Open a checking account if you don't have one or spring for a money order and keep your receipt. Finally do not forget to tell
our creditors your new address when you move.

Be Responsible.  If you are worried about making payments, make a list of  your debts and when the payments are due. Contact your lenders immediately if you think you will have trouble meeting the monthly payments to arrange a payment schedule.

Retirement Accounts and Life Insurance.  Taking money from your retirement  account or tapping the cash value of your life insurance policy to pay
bills or living expenses may have serious implications you haven't considered, so try to get advice from an expert before you take any major
financial actions. Credit cards can be invaluable in a crisis, since they allow you to charge items and pay them off over time. But they can also be dangerous if you aren't careful and charge more than you can afford. If you do use credit cards, choose those with the lowest interest rates and pay them back as soon as you can to cut your costs.