1st Time Homebuyers- What a Credit Score Really Means

Ok 1st Time Homebuyers, you have decided you want to buy a home. Do you know what your credit score is? Most people know that they have a credit score, that magic number that lenders rely on to determine whether or not to extend credit, but don’t really understand what a credit score is, what factors influence their credit score, or how their credit score is calculated. Here is a basic primer on what credit scoring is, how it works, and some tips on improving your score. how it works, and some tips on improving your score from . Jeff Harris, Senior Credit Consultant with TowneBank Mortgage.

What Is a Credit Score?

In short, credit scoring is a system many lenders use to determine how likely you are to pay back the money they lend to you. Your credit score is a snapshot of your credit risk at a particular point in time. The higher your credit score, the more likely you are to repay your debts on time, and the more likely you are to receive credit on favorable terms.

How Is a Credit Score Calculated?

The most widely used credit scores are based on the Fair Isaac & Co. (FICO) credit scoring model. FICO develops credit scores based solely on information contained in credit reports; it compares the information contained in a consumer’s credit report to the patterns of information contained in thousands of other credit reports, and calculates a credit score that predicts the level of future credit risk for a particular consumer. While FICO is the most well known type of credit score, it’s not the only one out there – some check approval services also develop risk models and scoring that are based on check writing patterns in order to predict the risk of a particular check being returned. You may also have more than one FICO score as each of the three major credit reporting agencies collect and report information in slightly different ways; since your credit score from each agency only uses the information contained in that agency’s report, it’s possible to have three different scores.

What Factors Influence the Credit Score?

Your credit score takes all factors into consideration; no one piece of information or one factor will determine your score, although some factors are weighted more heavily than others.


-Payment History – Your payment history determines approximately 35% of your total credit score. This factor looks at whether you pay your bills on time, or late. If they’re late, how late are they? How often do you pay late? How recent are your late payments? How many accounts show no late payments? Have you had accounts turned over to collection or a judgment entered against you? Have you filed for Bankruptcy?

-Amount Owed – How much you currently owe determines approximately 30% of your total credit score. This factor looks at the total amount you owe, and on what types of accounts. How many accounts have balances? How much of the total credit line is owed? How much is owed now in relation to how much you borrowed originally (i.e. for auto loans)?

-Length of Credit History – The length of your credit history determines approximately 15% of your total credit score. In general, a longer credit history will increase your score. This factor also looks at how long you’ve had certain credit accounts, and how long it’s been since you used certain accounts.

-New Credit – Approximately 10% of your credit score is based on how many new accounts you’ve established. This factor looks at how many new accounts you have, how long it’s been since you opened them, how many recent requests for credit you have made, and the length of time since credit report inquiries were made by potential lenders. Rate shopping should not affect this factor because the inquiries will be made for a particular type of credit during a short period of time.

Overall Credit Mix – Approximately 10% of your credit score is based on the overall mix of credit cares, installment loans, mortgage loans, etc. The more balanced the mix, the more likely this factor is to improve your overall score.

Improving Your Credit Score

There are several things you can do to improve your credit score, both in the short term and over time.
-Pay your bills on time.
-Pay down your debt.
-Check your credit report and correct any inaccurate items.
-Limit how frequently you apply for new credit and how much you charge on existing credit.
-Don’t close old accounts – this can shorten the length of your reported credit history.

I hope this information will be helpful! Please remember... If you or any of our friends, family, co-workers or neighbors have questions about the Triangle Real Estate Market... I can be reached by email, FillingimL@hpw.com or phone (919) 877-8832.

Warm regards,
Lora

Tips for Staging Your Home

Did you know that staged homes sell for more and in less time than homes that are not staged?

Decorating Is Not Staging. DECORATING is bringing items into your home to personalize to a taste and/or lifestyle. Condition Is Not Staging. CONDITION is maintaining a home, no amount of staging will overcome overpricing or poor condition.. STAGING is removing and rearranging items to showcase space, features and views of a home.

Did you know that there are 3 basic things that a buyer is purchasing that is unique to each home?

Each home offers it’s own unique views, space that can only be visualized within that home and features only your home may offer. When staging a home to sell a homeowner needs to make sure that a buyer can readily see the space, features and views of each room within seconds upon entry. When a buyer arrives at a home they will take about 15 seconds to determine if they like the home or not. With each room they enter they will determine within 5 seconds if that room meets their needs.

Staging begins at the doorway.

Look as though you are looking through the lens of a camera. What is the feature and/or the view of this room. Make sure nothing is moving into the line of vision reducing the visual size of the room. Buyers only know what they see, not the way it’s going to be.

There are 3 basic Levels of Staging:

1) Using Your Own Things 2) Vignetting Vacant Homes 3) Renting To Stage

Most of the time “Using Your Own Things” is the category that is used. Here are some simple rules of thumb to follow:
1) Clutter eats equity – so… de-clutter!
2) Remove all personal items. The buyers can not mentally move in if they feel you are not
ready to move out.
3) Pack up collections.
4) Remove Rugs – Covering hardwood or tile floors
5) Let the light in…open the shades or blinds, turn on lamp lights, check all lights bulbs and up
wattage in dark hallways.
6) Clean – Detail your home like you detail your car.
7) Eye is drawn to color – use color for the wow factor or to make an area pop in small
amounts – example: throw pillows, walls color in a bath or dining room. Paint is the lowest
cost investment with the highest rate of return. Wallpaper is dated after two years well
worth removing!
8) Most carpets need to be cleaned
9) Limit number of pillows on couch to two & remove blankets & throws
10) Be sensitive to odors
11) Keep music soft
12) If it is BROKEN – FIX IT ! !

For more information about staging or to review before and after photos go to http://www.trianglestagedhomes.com/ . It can mean the difference in $$$ in your pocket and extra time your home may be on the market!

For your personal consultation call Lora at 877-8832!