Stacy Thorne, Franklin American Mortgage – NMLS#228625
Credit Scoring: Top 20 Reason Codes
And How They Affect the FICO Score
A FICO® credit score is a performance objective score. The performance objective of the credit score is the “likely hood of a consumer to have a 90 day late on their credit report in a 24 month period”.
Here are the 20 Reason Codes (or Score Factor) that can show up on a mortgage credit report.
1. Amount owed on accounts is too high
2. Amount owed on delinquent accounts
3. Amount owed on revolving accounts is too high
4. Amount past due on accounts
5. Derogatory public record or collection filed
6. Lack of recent revolving account information
7. Length of time accounts have been established
8. Length of time revolving accounts have been established
9. Level of delinquency on accounts
10. Number of accounts with delinquency
11. Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high
12. Serious delinquency
13. Serious delinquency, and public record or collection filed
14. Time since delinquency is too recent or unknown
15. Time since derogatory public record or collection is too short
16. Time since recent account opening is too short
17. Too few accounts currently paid as agreed
18. Too many accounts recently opened
19. Too many accounts with balances
20. Too many inquires in the last 12 months
65% of the score is controlled by 2 categories that make up a score. So if the consumer is looking for a few extra points the reason codes can lead you to areas where you may find inaccurate or unverifiable information that could be affecting their scores.
Call me and let’s review the “reason codes” that show up on a credit report, line-by-line.
Jolene (Jo) Drenner
NMLS #362573 Iowa #19649 Nebraska #NE362573
Mortgage Loan Originator
WestStar Mortgage, Inc.
11812 South 25th Street
Bellevue, NE 68123
Direct Line 402.618.0593
Please help me congratulate Jolene (Jo) Drenner with WestStar Mortgage, Inc! Jo joined our Bellevue location of WestStar this past week as our newest Mortgage Loan Originator. She comes to us after 11 years with TD Ameritrade. Jo has a passion in helping others and this is evident in her business practices. She is licensed in both Nebraska and Iowa. When asked “Where is your office located?” she replys “Where ever my client needs me to be.” Jo strives to make the mortgage process as quick and easy as possible. One way she does so is by meeting her clients at a location convenient to them.
WestStar Mortgage Inc. (WestStar) is a privately held residential mortgage banking company with headquarters in the Washington, DC metropolitan suburb of Woodbridge, Virginia. We specialize in retail lending, originating primarily FHA, VA, USDA and Conventional loans.
The firm was chartered on June of 2000 as the result of the consolidation of an existing mortgage brokerage joining with an experienced leadership team coming from a large independent mortgage lender.
WestStar Mortgage, Inc. employs approximately 500 people located in its main corporate offices and in 50 Branch Offices.
Inflation Fears And Mortgage Rates Are Rising
Inflation is a self-reinforcing cycle. The longer it lasts, the more insidious its effects, and mortgage rates are an unfortunate consequence. Because inflation devalues the U.S. dollar, it devalues everything denominated in U.S. dollars. This includes mortgage-backed bonds, of course, so when inflation is present, demand for MBS starts to fall. Investors don’t want to own an assets that’s likely to lose its value over time, after all. Falling demand causes prices to fall, too. It’s basic economics. Then, as prices fall, the corresponding yields rise. This translates into higher rates for everyday Americans for all mortgage types — conforming, FHA, jumbo, and portfolio. Right now, inflation fears are high. Energy costs are higher, the Fed is pumping the economy, and the dollar is sagging. If not for the current unrest across the Middle East, mortgage rates would be blasting off. Home buyers and rate shoppers are looking a gift horse in the mouth.
Lock A Pre-Inflation Mortgage Rate
While You Can It won’t be long before Wall Street adjusts to the Middle East and, when it does, inflation will drive this market higher.
Author Dan Green DAILY The Mortgage Reports
Your Credit Score will not be a Secret Any More!
And, you have the Dodd-Frank Financial Reform Bill to thank for it.
Starting July 21, 2011, lenders will have to provide you with your credit score if you are turned down for a loan OR are charged a higher rate than the “best” rate they have to offer.
This applies to everyone—mortgage companies, auto dealerships, credit card companies, landlords, insurance agents, utilities—basically anyone who uses a credit score.
In addition to letting you know your credit score, you will receive an explanation of the range of the score and a graph on how your score compares to other consumer scores.
Here are some tips if you are not happy about your score:
- Contact the creditor who sent you your score and ask how many points are needed to get the best rates. If they tell you 15 or 20, it’s fairly easy to get it increased. If it’s 100, you’ve got your work cut out for you.
- If you’re planning on requesting credit in the future, order a credit report ahead of time and see what’s on it. The law allows you one free credit report every year. www.AnnualCreditReport.com . However, a credit score is NOT included so consider buying your credit score ahead of time – www.MyFico.com.
- Learn what goes into a credit score and www.scoreinfo.org has an educational website with great explanations on what influences credit scores.
If you decide to buy your credit score, be careful NOT to accidently sign up for a credit monitoring service which would be billed to you on a monthly basis. You don’t need that right now—you just need to know your score.
Over 2/3 of consumers haven’t ordered their free credit report in the last 12 months. Even if you aren’t applying for credit—you need to know what’s on your report!