Lake Havasu City Properties on Real Estate
Credit Score -???risked based pricing???
We are all aware of the importance of good credit. A good credit rating is the key to financial freedom.
The
actual formula for calculating a credit score is a trade secret. There
is, however, some general information that has become available over
the years. Understanding this information is the key to ???Exposing the
Mystery??? of your credit report.
Your
???Score??? is a number between 350 and 850. The higher the number, the
better a credit risk you are. A score below 680 is generally a cause
for concern for a lender. Should the score fall below 620 it becomes a
serious issue. An applicant at this level will be limited in the types
of mortgage products available and will most likely pay a higher
interest rate on his financing. Anything below 500 generally is too low
for any type of credit. Because of all the research done on patterns of
consumer defaults, the lending industry has been able to create a
sliding scale of interest rates. Instead of simply approving or
declining an application, a lender now has the ability to price a
mortgage based on the probability of default. This is called ???risked
based pricing???. This has made credit available to a wider range of
applicants than ever before.
A
loan is considered delinquent if the borrower has fallen behind on his
payments for 90 days or greater. An applicant with a score below 600
has a 1 in 8 chance that he will become delinquent in at least one of
his outstanding loans. As the score moves to 660 the odds fall to a 1
in 70 chance, at 780 it falls to a 1 in 570 chance. A score in excess
of 800 brings the odds down to 1 in 1200. These odds are only
approximate and they are constantly being revised. Loans age and the
economic conditions of the country change over time. New data is
constantly being added to the computer model to reflect these changes.
For
buying or selling real estate in Lake Havasu City, call Dean Baker
Owner/Broker Lake Havasu City Properties, 16 years experience, over 600
homes sold in Lake Havasu. Cell phone 928-486-3368 or (888) 854-7210.