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What’s the Real Score with your FICO Score?

FICO Score

FICO ScoreThere are plenty of credit reporting companies out there but when it comes to the getting a mortgage, the only ones that really matter are TransUnion, Experian, and Equifax.

How? You might ask. Let City Creek Mortgage answer it for you below.

Why Equifax, Experian, and TransUnion?

These three credit reporting companies matter because mortgage lenders will use the median of your credit scores as reported by these three for determining your overall credit score. To illustrate, say your credit scores from these three are 640, 680, and 710, your overall credit score will then be 680, since this is the median or the middle score between the three. This means that your scores won’t be averaged or rounded up.

In general, your credit score is called a “FICO score”, aptly called after a prominent pioneer in credit scoring, the Fair Isaac Co. Basically, all things being equal, you get better Salt Lake City mortgage terms if you have a higher FICO score.

Raising your FICO Score for Better Mortgage Deals

Once a credit reporting company publishes your score, along with your raw credit scores, normally, it will also offer comments and ways you can use to increase your credit score. These are very useful and can range from the basic comments to more detailed ones that can serve as your blueprint towards raising your FICO score.

Note that you can actually improve your score up to 100 points when you pay attention to the recommendations noted in the credit report. However, these five tips will ensure that you’ll raise your FICO score significantly:

  1. Always pay all your bills on time.
  2. Ensure that the balance on your credit card is lower when compared with your overall available credit.
  3. Always pay your utility and doctor’s bills on or before their due date.
  4. Ensure that your “aged” credit cards remain open and utilize them every so often.
  5. Only get store charge cards when necessary.

Preferably, the balance on your credit card must not exceed 30% of your card’s overall available balance since this comprises 30% of your FICO score. In the event that you’re having difficulties paying off your charges, ask your credit company if you can increase your credit limit because increasing your credit limit may be effective in increasing your FICO score as paying off your remaining balances.

In addition, if you see a potentially bad event in your credit report, perform due diligence before using credit repair companies because you may need some time to fix your bad credit on your own before applying for a Salt Lake City mortgage.