Before determining which loan program you qualify for, your credit profile must be analyzed.  The higher your credit score is, the more favorable your terms and interest rate become. We need to know two things about your credit profile: 1# Your payment history on all liabilities listed on your credit report (and) #2 The current amount of your monthly payments you're obligated to make for all active installment and revolving loans.  For your willingness to pay back current and previous loans, we will consult your credit score. We will also look at your debt-to-income (DTI) ratio (other monthly debt payments).

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 450 (high risk) and 850 (low risk).  Three bureaus will report your score.  For qualification purposes, we will use the middle of the three or the lower of two if only two bureaus report a score.  If you haven't had any credit or haven't had active trade-lines within a reasonable period of time, then "No-Scores" will be reflected.  Don't worry, we have programs available for "No-Score" credit profiles that will allow up to 100% financing! 

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. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.

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.

Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten-year old accounts are great; six month old accounts are good due; etc...) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested or inquiries.

Your credit report must contain at least one account which has been open for six months or more, 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 non-traditional trade-lines such as a phone bill, car insurance, electric bill, gas bill, etc...in order to qualify for a mortgage loan.

If you have collections or charge-off's listed on your credit report, you may qualify for a mortgage loan without having to satisfy these debts.  Typically, if these type of items do not affect title to your property, they can be overlooked.  If you have liens or judgments on your credit report, then these items will affect title and must be satisfied prior to closing.