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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

  • Massachusetts Pending Home Sales and Median Price Up Again in June

    The Massachusetts Association of Realtors® (MAR) reported today that single-family pending home sales were up over nine percent in June from last year. Pending condominium sales were also up more than 12 percent. The median price for both single-family homes and condos saw a hike, with the single-family median price rising over the $400,000 mark. Realtors® confidence both in the market and in home prices dipped slightly in June. This month’s “Hot Topic” question finds that the majority of Realtors® surveyed have had at least one transaction that was an all-cash deal (i.e. no mortgage involved) since the beginning of the year.

    June Pending Sales: 

    Single Family June 2017 June2016 % Change
    Sales 6,723 6,128 9.7%
    Median Price $410,000 $380,000 7.9%
    • Pending sales have been up 51 of the last 52 months 
    Condominium June2017 June2016 % Change
    Sales 2,596 2,307 12.5%
    Median Price $370,000 $349,900 2.9%
    • Pending sales have been up or flat 20 of the last 22 months 

    “The increase in homes put under agreement this month may be a positive sign for a spring market that has suffered plummeting inventory,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway. “However, median prices have continued to rise, which can push some buyers out of the market.”

    Realtor® Market and Price Confidence Indexes: 

    Confidence Index June2017 June2016 %Change
    Market 80.73 80.97 -0.29%
    Price 71.79 73.87 -2.82%
    • The Realtor® Market Confidence Index went down for the first time in 27 months
    • The Realtor® Price Confidence Index went down for the first time in six months
    • Measured on a 100-point scale, a score of 50 is the midpoint between a “strong” (100 points) and a “weak” (0 points) market condition  

    “The Realtor® Market Confidence Index has dipped year-over-year for the first time in over two years, indicating that Realtors® are growing concerned about some of their buyers being able to succeed in this market,” said Yorkis. “However, both indexes reveal that ultimately Realtors® remain positive. We just need to see more inventory to keep up with the demand.”

    With home inventory being as tight as it is, you want to give yourself every advantage if you are thinking of buying a home in Massachusetts. For the best possible experience, be sure to work with an agent who is a member of the Massachusetts Association of Buyer Agents.