Introducing UltraFICO Score

Starting in 2019, Lenders will have access to The NEW UltraFICO credit scoring system.  For the first time, consumers will have the opportunity to give permission to include their personal Checking and savings account information.  This new Scoring model is designed to help those with little to NO Credit as well as those that just fall short of qualifying on their Credit application.  The system is deeming this as a SECOND CHANCE for borrowers.

So what items is the Ultra FICO scoring system going to look at:

  • Average Balances
  • No negative balances
  • Steady payment being made

As stated by Sally Taylor who is the VP of FICO

Who is using the Ultra FICO Score:

The new scoring system will ONLY be available when a lender pulls a credit report from Experian.  Experian has partnered with FICO as well as Finity to offer this product.  Finicities role in this is to pull information from the consumer’s personal bank account and report their findings back to Experian.  Information such as amounts paid, names of creditors and other information will NOT be used or disclosed back to Experian for many legal reasons especially Privacy laws that Lenders face on a daily basis.

Ultra FICO is expected to be ready to begin its pilot program early in 2019 and will be available to both consumers and lenders at that time.  However, all of this will be up to the LENDERS and if they will use and embrace this program.  Changing the way lenders use and read consumers credit is a big challenge.  To explain it further, FICO came out in 2014 with an updated credit scoring system FICO 9, and upgrade from FICO 8, that came out in 2009.  FICO 9 has still to this day not gained any momentum.

The good news is this program puts the consumer in charge.  You, the consumer, will choose if you want to take part and grant access to your Lender and Finicity to compile the data necessary from your checking and savings account.  For some, this system will change your loan decision from a denial to an APPROVAL.  However, for others, it may, in fact, hurt your credit and actually reduce your credit score.  So be careful before you agree to having your lender obtain your Ulta FICO score.

I am a mortgage broker and have been for over 30 years.  When someone applies for a Mortgage 90% of all loans are put through Fannie Mae or Freddie Mac.  These two entities are slow to change and the technology behind the scenes in more complex than most can imagine.  I personally feel that the Ultra FICO will start off with personal loans, Insurance and car loans well before it will be embraced by the Mortgage Industry.  Only TIME WILL TELL.

Bottom line:  The Ultra FICO will one day be a GAME CHANGER for those with little to NO credit and for those needing to offset some old credit that is affecting their credit Scores.  But as for 2019, I do not think this will be a GAME CHANGER for everyone.

 

In conclusion:

  • Ultra FICO has been developed for those with Little to No credit
  • Experian will be the only credit agency utilizing this new Scoring system
  • Your personal checking and savings account will be added to your credit scoring model.
  • Average balances bounced checks, negative balances, as well as payments being made each month, will be factored into the score

 

 

Boost Your Credit Score Fast With These 7 Simple Tips

By now you are aware that your Credit Score determines everything from getting approved for a credit card to the interest rate you will get on a car or mortgage-or whether you will get a loan at all.  In September 2018 a study showed that the Average FICO credit score hit an all-time high.  For the first time, the average credit score has reached a high of 704 according to FICO.  Even with this GREAT NEWS, there are still more than 20% of consumers who still have what is considered a “BAD SCORE”-less than a 600 FICO score.

If your one of the 20% here is a list of my TOP 7 Fastest Credit Boosting Tips

1. Clean Up The Misinformation On Your Credit Report.

The first thing you should do is get your TRUE CREDIT SCORE (FICO).  This report will provide you with the same Credit and Credit Scores that your Lender will use when making a credit decision.  My choice for this is MyFICO.  It will cost you less than $50 but will provide you with:

  • Trans Union
  •  Equifax
  • TransUnion:

*All Versions and variations (Mortgage, Car, Insurance & Credit Card Scores)

Now that you have every variation of your FICO Score you need to take time and examine the report in great detail to spot any errors or misinformation.  One out of five people has misinformation on their credit that is the cause of a reduced Credit Score.  If and when you do spot any inaccuracies on your report there are tools to help you dispute these inaccuracies.

2. Pay Down Your Balances to less than 30% of your High Credit Limit.

Credit utilization accounts for 30% of your Credit Score and according to Experian its best to have a utilization rate of less than 30%.  Utilization rate is calculated by dividing your current balance by the High Credit Balance on your account.  For Example, if you have a credit card with a $10,000 high credit limit and have a balance of $5,000 you would have a 50% ($5,000 / $10,000) utilization rate.  In this example, by paying down your balance to $3,000 or less you will increase your credit score.  Unfortunately, the exact increase in your score is unknown.

 

3. Make Multiple Payments Per Month:

You may think that paying off your credit card in full each month is the BEST thing you can do for your credit score.  Think Again:  The issue with this is that creditors only report to the credit agencies once a month.  Let’s say that you use your credit card for everything from gas to groceries and even some of your monthly utility bills, in an effort to max out your rewards.  Once your statement comes in you pay the balance in FULL.  The credit card company reported you to the agencies and your $2,000 credit limit is at full capacity.  Your utilization rate is now at 100%, therefore, lowering your credit score.  By making a payment halfway through the month and then again once your statement comes in you can reduce your utilization rate down to 50% resulting in a HIGHER Credit Score.

 

4. Increase Your Credit Limits:

This is the #1 thing I advise every one of, my clients if we have any issues with their Credit Score.  Its the Fastest and easiest way to increase your credit score.  Let’s say you have a credit card with a $250 credit limit.  You charge a few things and max out the card.  At this point, you are at a 100% utilization rate.  By calling your creditor and ask for an increase on your account to $1000 you automatically reduced your utilization rate from 100% to 25%.  FAST & EASY!

 

5. Open A New Account:

In the event that your creditor will NOT Increase your credit limit (ABOVE) apply for another card.  This will help with your utilization rate because the rate is factored on all your account balances.  Another recommendation is a balance transfer:  If you owe $2500 on a card with a high credit limit of $2500.  You’re at a 100% utilization rate.  A balance transfer of $1250 to the new card will reduce your utilization rate. assuming your new account has a high credit limit of at least $2500.

 

6. Collections:

This is an area that I see the most damage to my client’s credit scores.  Logic would say that if you have an account in collections and pay it off you would see an increase in your credit score.  Not so fast:  You need to pay attention to the “Last Active Date” that shows on your TRUE CREDIT REPORT.  If the Last Active Date is over 2 years old DO NOT PAY IT!  The reason for this is your credit agency is reading the date that shows as being the LAST ACTIVE.

Example:  If you have a collection account from 2010 and you owe $500.  The credit agency scoring is reading this as a collection from 2010.  However, if you pay off the account today, the credit agency scoring will now read this as you have a recent collection.  The best advice I can give on this matter is to negotiate with the creditor and try to settle on an amount that they will accept and REMOVE the account from your credit.  If they are not willing to REMOVE then I would suggest focusing on other accounts that you have in collections or paying down high utilization rate accounts.

 

7. Authorized User:

This is my #2 Favorite quick Credit Score boost technique.  Finding the person to do this for you may be a challenge but when pleasing your case you may want to advise them that you’re not looking to have access to their credit account.  The person doesn’t even have to issue you a card of your own, they just need to add you to their account.  Their credit profile will reflect in your Credit Score.  So make sure to pick the right person for this.  They need to add you to an account that has a perfect pay history with a low utilization rate.

What is the most accurate credit score site?

Free Credit Scores are the RAGE these days with a new one popping up every day.  Are these Sites the best place to go if you’re looking for an Accurate Score that Credit Card, Auto Dealerships, Insurance Companies, and Mortgage Lenders Truly use.  I hate to tell you this but NO.  Most of the free credit score companies will provide you with the Vantage Score which is an alternative to the long-standing FICO scoring model. First, let’s talk about the difference between Vantage Score and FICO Score.

Vantage Score:

A Vantage Score is a consumer credit-scoring model, created through a joint venture of the three major credit bureaus (Equifax, Experian, and TransUnion). The model is managed and maintained by an independent company, VantageScore Solutions, LLC, that was formed in 2006 and is jointly owned by the three bureaus.[1]

VantageScore models compete with the credit scoring models produced by Fair Isaac Corp. FICO.[2][3] Like the models developed by FICO, VantageScore models operate on data stored in the consumer credit files maintained by the three national credit bureaus. VantageScore models and FICO models use statistical analysis on those data to predict the likelihood a consumer will default on a loan. VantageScore and FICO models represent the risk of loan default in the form of three-digit scores, with higher scores indicating lower risk. VantageScore and FICO use different, proprietary analytical methods, and scores from one system cannot be translated into one from the other.

FICO Score: 

A FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use borrowers’ FICO scores along with other details on borrowers’ credit reports to assess credit risk and determine whether to extend credit. FICO scores take into account various factors in five areas to determine creditworthiness: payment history, the current level of indebtedness, types of credit used, length of credit history and new credit accounts.

 

Then why would anyone want to find out their Vantage Score instead of their FICO Score?  Great question.  The primary reason for this is cost.  The CFPB has made it possible for you to obtain a copy of your FICO Credit report from all three of the primary Credit Bureaus (Trans Union, Equifax, and Experian).  However, it only provides you with ONE Report a year.  If you’re looking to monitor your credit you would have to sign up with a service that normally comes with a monthly or annual fee.

I have been in the Mortgage business for over 30 years and I have seen Thousands of Credit Reports and have taken a passion to learn as much about Credit Reports and Credit Scores as I could.  My research had me look into every major Free and also PAID Credit Scoring websites out there over the past three decades and here is what I determined.

FREE:

My #1 Choice when it comes to the FREE Credit Scoring websites is Credit Sesame:
The Reason for this being my #1 Choice is that:
  • Easy to Sign Up
  • It offers Credit Monitoring Systems
  • FREE $50,000 Identity Theft Protection
  • Credit options for Car Loans, Credit Cards, Personal Loans and Mortgages
  • Easy to Read
  • So Much More

PAID:

My #1 Choice when it comes to the PAID Credit Scoring websites is MyFICO.

Whether you’re buying a home, a car or applying for a credit card – lenders want to know the risk they’re taking by lending you money. FICO® Scores are the credit scores used by 90% of top lenders to determine your credit risk. Your FICO® Scores (you have FICO® Scores for each of the 3 major bureaus) can affect how much money a lender will lend you and at what terms (interest rate). Higher FICO® Scores can often help you qualify for better rates from lenders – which can save you money!

When it comes to your Credit Score you have to make the decision if you want to go with the FREE Credit Score Sites that offer you a Vantage Score or if you want to spend a little money and get your FICO Credit Score that your Lender, Credit Cards Companies, Auto Dealership and Insurance company will be using to determine your rates.

I personally Choose BOTH:

 

 

Did you know you have more than one FICO® Score?

Over the past 25 Years, the FICO Score has become the most widely used Credit Tool for Lenders when looking at a persons credit profile.  The Scoring system has been evolving over time and has been updated numerous times over its lifetime.  What was once considered Below Average Credit may now be deemed satisfactory due to such changes. But did you know that there are over 20 variations of your FICO Score?

Below is the MOST RECENT FICO Score Models used by the Major Lenders Today:

Experian Equifax TransUnion
Most widely used version
FICO® Score 8 FICO® Score 8 FICO® Score 8
Versions used in auto lending
FICO® Auto Score 8
FICO® Auto Score 2
FICO® Auto Score 8
FICO® Auto Score 5
FICO® Auto Score 8
FICO® Auto Score 4
Versions used in credit card decisioning
FICO® Bankcard Score 8
FICO® Score 3
FICO® Bankcard Score 2
FICO® Bankcard Score 8
FICO® Bankcard Score 5
FICO® Bankcard Score 8
FICO® Bankcard Score 4
Versions used in mortgage lending
FICO® Score 2 FICO® Score 5 FICO® Score 4
Newly released version
FICO® Score 9
FICO® Auto Score 9
FICO® Bankcard Score 9
FICO® Score 9
FICO® Auto Score 9
FICO® Bankcard Score 9
FICO® Score 9
FICO® Auto Score 9
FICO® Bankcard Score 9

 Why so many FICO Scores and how do Lenders us the FICO Score.

Lenders can choose what version of the FICO Score they feel is most reliable to their particular credit profile.  As you can see from the chart above there are various models for different Credit requests.  For example, if you’re looking to purchase a car then the dealership that you are working with would most likely use the FICO Auto Score.  Now, what Version (2,4,5,8,9) is completely up to that Dealership or their participating lender.  Some hold true for the other variations of the FICO scoring system related to Auto, Bankcard and Mortgage Lending.

How is FICO® Score 8 different from previous versions?

  • High credit card usage
    Though all FICO® Score versions consider high credit card utilization to be reflective of higher risk, FICO Score 8 is more sensitive to highly utilized credit cards. So if a credit report shows a high balance close to the card’s limit, FICO Score 8 will likely be more impacted than a previous score version.

Keeping credit card balances low can help maintain or improve the score.

  • Isolated late payments
    If a lender reports to the credit bureau that you were at least 30 days late with your payment, it will likely result in a loss of points within all FICO® Score versions. If the late payment is an isolated event and other accounts are in good standing, FICO Score 8 is more forgiving compared to previous FICO Score versions.

However, if the credit report shows numerous late payments, the reverse is true and the FICO® Score 8 will likely lose more points as compared to previous FICO Score versions.

  • Authorized user of credit card
    All FICO® Score versions include authorized user credit card accounts when calculating a FICO score. This can help people benefit from their shared management of a credit card account. It also helps lenders by providing credit scores that are based on a full snapshot of the consumer’s credit history.

Introducing FICO® Score 9 – the most predictive FICO Score to date

Many lenders have already upgraded, or are in the process of upgrading, to FICO® Score 9. It’s our newest FICO Score version, and it has important updates that make it the most predictive FICO Score yet.

  • Third-party collections that have been paid off no longer have a negative impact.
  • Medical collections are treated differently than other types of debt. Unpaid medical collections will have less of a negative impact on FICO® Score 9.
  • Rental history, when it’s reported, factors into the score? this may be especially beneficial for people with a limited credit history.

 

What’s the difference between base FICO® Scores and industry-specific FICO® Scores?

Base FICO® Scores, such as FICO Score 8, are designed to predict the likelihood of not paying as agreed in the future on any credit obligation, whether it’s a mortgage, credit card, student loan or other credit product.

Industry-specific FICO® Scores incorporate the predictive power of base FICO Scores while also providing lenders a further-refined credit risk assessment tailored to the type of credit the consumer is seeking. For example, auto lenders and credit card issuers may use a FICO Auto Score or a FICO Bankcard Score, respectively, instead of base FICO Scores.

FICO® Auto Scores and FICO Bankcard Scores have these aspects in common:

  • Many lenders may use these scores instead of the base FICO® Score.
  • It is up to each lender to determine which credit score they will use and what other financial information they will consider in their credit review process.
  • The versions range from 250-900 (compared to 300-850 for base FICO® Scores) and higher scores continue to equate to lower risk.

Which FICO® Score version is important to me?

Consider these guidelines:

Financing a new car? You’ll likely want to know your FICO® Auto Scores, the industry-specific scores used in the majority of auto financing-related credit evaluations.

Applying for a credit card? You’ll likely want to know your FICO® Bankcard Scores or FICO Score 8, the score versions used by many credit card issuers.

Purchasing a home or refinancing an existing mortgage? You’ll likely want to know the base FICO® Score versions previous to FICO Score 8, as these are the scores used in the majority of mortgage-related credit evaluations.

For other types of credit, such as personal loans, student loans, and retail credit, you’ll likely want to know your FICO® Score 8, which is the score most widely used by lenders.

Learn More about your FICO Score and other Facts at www.CreditScoresandMore.com

 

 

 

 

 

 

Down Payment Assistance Programs | Explained

Why are my Realtor Partners Are Selling More Homes in 2018 than their competition?

 

Imagine if you were able to provide your clients with a Down Payment Program that provides:

  • More Money than IHDA | up to $20,000
  • Lower Rates
  • Lower Fees
  • Lower Credit Score requirements
  • No Repayment required or a MAX of 3 Years VS 5 Years

Here is a description of the DAP that is putting my Realtor Partners Buyers into Homes at the pace of 1 a DAY!!

Down Payment Assistance Programs

 

FHA & VA   3%  & 4%   USDA  3% MAX  DAP

  • 620 score
  • Do NOT have to be 1st Time Homebuyer
  • Non/occupant borrowers:  Not allowed
  • income limits   140% of Area Median Income (AMI)  https://www.huduser.gov/portal/datasets/il.html
  • Non/occupant borrowers:  Not allowed
  • 50% MAX Debt Ratio
  • max 6% seller concessions
  • Owner Occupied Only
  • Gift Funds allowed

 

Conventional 4% & 5% DAP

Power Purchase 2% Grant

  • 620 score
  • income can NOT exceed Freddie Mac income limitations  http://www.freddiemac.com/homepossible/eligibility.html
  • Do NOT have to be 1st Time Homebuyer
  • Non/occupant borrowers:  Not allowed
  • Owner Occupied Only
  • Gift Funds allowed
  • Freddie Mac Home Possible Advantage underwriting
  • 3% MAx Seller contribution

 

Visit me on the Web:   WWW.TheMortgageUpdate.net

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