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Credit Scores

Credit Scores - Know Yours

Your credit scores affect whether you will get approved for credit and what interest rate you will pay for credit cards, auto loans, mortgages, etc. The higher scores mean you are more likely to be approved and pay a lower interest rate. Good credit scores are a vital part of your financial health.

Fair Isaac Corporation developed the FICO scoring system. Unfortunately, the free credit scores offered over the internet are not the FICO score which most lenders use to determine how credit worthy you are. If you are serious about buying a home, know what your credit score is to be informed of how this score will affect your ability to finance a home and at what cost.

What is a Good Score?
Credit scores range from 300 to 800. Most lenders consider FICO credit scores above 700 to be very good and a sign of good financial health. A score below 600 indicates a high risk to lenders and therefore they could charge you a much higher rate or even turn down your credit application.

How are FICO scores assessed?
Here is how these scores are calculated from your credit report:

  • Your payment history is about 35% of your FICO score. Have you paid your credit accounts on time? Late payments, bankruptcies, and other negative items can hurt your credit score. On-time payments help your score.
  • How much you own is about 30% of your FICO score. FICO scores look at the amount you owe on all your credit accounts.
  • The length of your credit history is about 15% of your FICO score. Generally, the longer you’ve had a credit history, the higher your score, because there is more of a track record to look at. Of course, it’s better if you’ve always made payments on time.
  • New credit is about 10% of a FICO score. This includes efforts to obtain loans or credit lines in the past few months. Remember: if you have too many people making credit inquiries about you, that could indicate that you’re in financial trouble or perhaps buying many high-ticket items.
  • The type of credit you use is about 10% of a FICO score. This includes installment loans, leases, mortgages, credit cards, etc. Mortgages are considered “better” then credit card debt.

How to Improve Your FICO Score

  • Paying your bills on time is an absolute must. Delinquent payments and collections can really hurt your score.
  • Keep balances low on credit cards. High debt levels can hurt your score.
  • Apply for and obtain new credit accounts only when you need them.
  • Pay off debt rather than moving it between credit cards.
  • If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
  • If you have limited credit, obtain additional credit. Not having sufficient credit can also negatively impact your score.

Latest from the Blog

  • Closed Home Sales Down in April After Record Inventory Lows and Rising Prices

    Median Sales Prices Have Seen Year-Over-Year Increases for 19 Straight Months

    WALTHAM, Mass. – May 23, 2017 – The Massachusetts Association of Realtors® (MAR) reported today that low inventory and rising prices caught up to the spring market, with single-family home sales decreasing over eight percent from this time last year. Both single-family and condominium prices saw a hike. Condominium sales decreased almost 10 percent from April 2016.

    April Closed Sales:

    Single-Family April 2017 April 2016 %Change
    Sales 3,735 4,082 -8.5%
    Median Price $362,500 $349,900 +3.6%
    • Closed sales have been down for four out of the last 12 months
    • Median prices have been up or flat for 16 out of the last 17 months
    Condominium April 2017 April 2016 %Change
    Sales 1,455 1,607 -9.5%
    Median Price $345,000 $329,950 +4.6%
    • Closed sales have been down for four out of the last 12 months
    • Median prices have been up or flat for 16 out of the last 17 months

    “With the current trend of plunging inventory and rising prices, the odds were strong that sales increases of the winter market would be unsustainable through the spring,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway. “The demand is there; we just need more homes on the market to satisfy that demand.”

    Inventory and Days on Market:

    Single-Family April 2017 April 2016 %Change
    Inventory 13,234 19,392 -31.8%
    Months of Supply 2.7 4.0 -32.5%
    Days on Market 81 107 -24.3%
    New Listings 7,706 8,513 -9.5%
    • 62nd time in the last 63 months of year-over-year inventory decreases
    Condominium April 2017 April 2016 %Change
    Inventory 1,455 1,607 -9.5%
    Months of Supply 2.0 2.8 -28.6%
    Days on Market 60 78 -23.1%
    New Listings 2,640 2,971 -11.1%
    • Inventory down for 16 out of the last 17 months

    “Unfortunately, our existing level of inventory makes it hard for us to meet our current and future housing needs,” said Yorkis. “If we don’t do anything soon, it will have a negative impact on the entire Massachusetts economy.”

    If you are thinking of buying a home anywhere in the state of Massachusetts, it is in your best interest to work with a member of the Massachusetts Association of Buyer Agents. These men and women are dedicated to working exclusively on your behalf to ensure that you have the best possible home-buying experience. Find a MABA agent here.