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What is a Good Credit Score?

Jessica Miller — Tue, 07 Jul 2009 17:41:44 GMT

Your credit score is also known as your FICO score. FICO stands for Fair Isaac Corporation - the company that developed the mathematical formula to determine credit scores. It's a number that reflects your financial responsibility and helps lenders decide if you're a good credit risk or not. Your score is based on - but not part of - your credit report. It's generated at the time of request, then included with the report when requested by lenders.

What Determines My Credit Score?

The five main factors that determine your Credit Score are:

Payment History (approximately 35% of your score)
The factor that has the biggest impact on your score is whether you've paid past credit accounts on time. However, an overall good credit picture can outweigh a few late payments which will continue to have less impact over time unless the late payment is a mortgage payment.

Amounts Owed (approximately 30%)
Having credit accounts and owing money doesn't mean you're a high-risk borrower. But owing a lot of money on numerous accounts can suggest that you are financially overextended and may be more likely to make some payments late or not at all. Part of the science of scoring is determining how much debt is too much for a given credit profile.

Length of Credit History (approximately 15%)
In general, a longer credit history will increase your FICO score because it shows that you can responsibly manage your available credit over time. However, even people who have not been using credit very long may get high scores, depending on how the rest of their credit report looks.

New Credit (approximately 10%)
People today tend to have more credit and to shop for credit more frequently. But opening several credit accounts in a short period of time can represent greater risk - especially for people with short credit histories. Requests for new credit can also represent greater risk. However, FICO scores are able to distinguish between a search for many new credit accounts and rate shopping. FICO scores generally do not equate your rate search with higher credit risk.

Types of Credit in Use (approximately 10%)
Your FICO score will reflect a combination of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. While a healthy mix will improve your score, it is not necessary to have one of each, and it is not a good idea to open credit accounts you don't intend to use. The credit mix usually won't be a key factor in determining your score, but it will be more important if your credit report doesn't have much other information on which to base a score.

Interpreting Your Credit Score: What's Good and What's Bad?

A high - or "good" - credit score can be in the mid-700s and higher. If you are below this range, however, your credit score will list up to four reasons why your score is not currently higher, and whether your credit report might contain errors. Knowing this can help you figure out how to improve your score.

Here are nine common explanations for a lower credit score:

Serious delinquency: You have one or more accounts with late payments.
Serious delinquency and public record of collection filed: You have one or more accounts that have gone to a collection agency.
Time since delinquency is too recent or unknown: You have one or more accounts that are recently past due.
Level of delinquency on accounts: Your accounts are 60 to 90 days or more past due.
Number of accounts with delinquency: You have numerous past due accounts.
Amount owed on accounts: Your amount of debt is too high.
Proportion of balances to credit limits on revolving accounts is too high: The balances on your credit cards are too high.
Length of time accounts have been established: The length of your credit history is not long enough to show responsible credit management.
Too many accounts with balances: The amount of accounts you have with balances creates concern over how much debt you're carrying.

How to Buy a Home: Finding the Right Deal

Keller williams real estate E-mail User — Mon, 29 Jun 2009 21:46:42 GMT

By Jessica Heffner, Staff Writer Updated 11:15 AM Monday, June 29, 2009

If you feel you're ready to make the plunge into real estate, the first thing you need to do is get preapproved.

Loans that pay you

When you are signing up for a loan, why not get one that pays you? If you get a mortgage through a credit union, you may be eligible for a rebate through the CU Realty program, which pays you part of a Realtors' commission just for using one in the lender's network.

This money can be used as part of the down payment, closing costs or even as a check written directly to you. My husband and I received about $500. Find a credit union that participates near you at cuofohio.org.

Finding a deal

Not every home is a deal, even in today's market. The key is finding homes in your price range, then checking comparable sales to see where they stack up. Zillow.com is a great tool for that. Use your Realtor to also scope out deals.

The best deal is going to be the ugly house - the outdated one with wallpaper, paneling and old appliances. A little "sweat equity," and you can increase its worth and end up with more money in your pocket than buying one that is move-in ready, polished and painted to perfection. If any home is too polished, be wary. Ask yourself, what are the paint and pretty fixes hiding?

The bidding war

When you finally find the house you want, one of the worst things that can happen is a bidding war - when you must bid on the house against another faceless buyer in hopes the seller will pick you as the top dog. Unfortunately, this is what we did face.

So what do you do? We talked to our Realtor, figured our what comparable home sales were in the area, discussed what the home was worth to us and went in with our best offer. It was still under the list price, and we decided if the seller didn't take it, then this was not the home for us.

The strategy worked, because less than 24 hours later, we got the house.

Optimize Your Clients' Results - 10 Real Estate Resolutions For Buyers and Sellers

Keller williams real estate E-mail User — Thu, 25 Jun 2009 08:33:00 GMT

RISMEDIA, January 12, 2009-The New Year is here, and many are more resolved than ever to achieve real estate goals that went by the wayside in 2008 due to economic and other concerns. But, what's one to do to optimize their chances of success amid what's still a tumultuous, highly demanding marketplace?

"While tricks of the trade abound to give buyers and sellers a leg up on the competition, there are also a number of basic pitfalls buyers and sellers should be sure to avoid lest they commence their real estate venture on shaky ground," notes Robert Jenson, CEO of luxury Las Vegas real estate purveyor The Jenson Group.

With this in mind, Jenson offers these New Year's Real Estate Resolutions to help buyers and sellers avoid common blunders and get the deal done:

Buyer Resolutions:

1. I Will Get Loan Pre-Approval: Many buyers want to find the "perfect" home before having their credit pulled, which can backfire when an offer is on the table and time is of the essence. It's wise to get pre-approved for a loan even before you view your first home. Your credit report may contain inaccurate information that you were not aware of, which can be a time consuming process to rectify. Or, you might not like what loan program you qualify for, or you might qualify for a higher loan value than you thought. Ultimately, you will need a pre-approval letter with your offer, so do yourself a favor and do this in advance. It's free, after all.

2. I Will Have Clear Goals. Create a realistic idea of the property you'd like to buy. What features are most important to you? Make two lists: one of the items you can't live without and one of the features you would enjoy. Refine the lists as the house hunt progresses, but remember that no place is going to be 100% perfect. It is going to be up to you to put the finishing touches on and call it home.

3. I Will Not Forego Home Inspections. After your offer is accepted, set up a home inspection. It's not uncommon to find problems, including leaky roofs, cracked walls, insect infestations and foundation problems. Hire a reputable inspector, and negotiate to get you the most for your money once the inspector's report is final. If you negotiate repairs as part of the purchase, ask for a "walk through" before finalizing the paperwork to assure all issues are resolved to your satisfaction. Also inquire about home protection plans as part of the purchase, which may save you money in the short and long-term future.

4. I Will Diligently Shop Mortgages. A difference of even half a percentage point can mean a considerable savings over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8% vs. 7.5% is about $35 per month. Over 30 years, that's $12,600. Be a smart consumer and comparison shop for the most favorable mortgage rates and terms.

5. I Will Use a Buyer's Agent. Purchasing a home could be the most important and complex financial transaction you engage in, and going it alone is risky. Indeed, a buyer's agent can save you time, hassle and thousands of dollars. Take time and care when selecting a real estate buyer's agent - find someone you can trust, and that you have a good rapport with.

Seller Resolutions:

1. I Will Not Overprice My Home. Every seller naturally wants to get the most money for his or her product. The most common mistake that causes sellers to get less than they hope for, however, is listing too high. Listings reach the greatest proportion of potential buyers shortly after they reach the market. If a property is dismissed as being overpriced early on, it can result in later price reductions, which reflect poorly on the listing. Overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price than they likely would have had they been priced properly in the first place.

2. I Will Not Limit Showings. Are you serious about selling your home? Then you need an open door policy and to ensure the home is ready to be shown at the drop of a hat...even if you're not around. Pack up your valuables and provide an outdoor lockbox that real estate agents may access at their discretion. Most showings are fairly spur of the moment, and you don't want to miss out on any qualified prospect.

3. I Will Properly Stage My Home. When attempting to sell your home to prospective buyers, do not forget to make your home look as pleasant and fresh as possible. Plant flowers, wash the windows and screens, put on a coat of new paint, lay new carpet, add furnishings and décor items, eliminate clutter and remove personal photographs from around the house. It's time to show off your beautiful home and make someone else feel completely at home in it. First impressions are critical, so ensure the junk is packed in boxes, and all boxes are put in storage vs. the garage so the prospective buyer can properly evaluate and appreciate that part of the house, too. Clean out the closets, so they look bigger.

4. I Will Not Wait for an Offer Before Making Needed Repairs. Would you buy a Ferrari with bent rims, stained rugs and cigarette burns in the seats, even if the seller was offering a "repair credit"? Doubtful, as the buyer would have an understandable poor impression of how the vehicle was treated and assume the worst. When selling a home, eliminate any need for such credits in advance. Even before you list it for sale, hire professionals to inspect the roof, pool, and other structural elements, and for termites and other important buyer considerations. Make ALL repairs before you list the house on the market to thwart anticipated objections in advance.

5. I Will Be Aware of All Contract Terms. It is extremely detrimental to be ill-informed regarding the details of your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what you are responsible for before signing any contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws affect your transaction? Your real estate professional should ensure you know the answers to these kinds of questions, which can save you a considerable amount of money.

Why Use a REALTOR®?

Keller williams real estate E-mail User — Thu, 18 Jun 2009 12:15:42 GMT

Why Use a REALTOR^®?

All real estate licensees are not the same. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the REALTOR "®" logo on the business card or other marketing and sales literature. REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reports that 84% of home buyers would use the same REALTOR® again.

Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be foolish to consider a deal in real estate without the professional assistance of a REALTOR®.

But if you're still not convinced of the value of a REALTOR®, here are a dozen more reasons to use one:

1. Your REALTOR® can help you determine your buying power -- that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders -- banks and mortgage companies -- offer limited choices.

2. Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.

3. Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

4. Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.

6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.

7. Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly.

8. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.

9. Your REALTOR® markets your property to other real estate agents and the public. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients.

10. Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.

11. Your REALTOR® can help you objectively evaluate every buyer's proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing -- a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.

12. Your REALTOR® can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).