Credit Scores Are Freaky!
Was talking to a potential REI partner tonight and we began to talk about his credit score. He mentioned that it used to be mid 700's but had recently gone to 698. He had bought a service online where he can check his reports as a merged file of all three credit reporting buerus and get his beacon etc. It akso has a feature of tellnig what hurts your score and what helps your particular score. The reason it gave for his lower beacon appeared to be that his mortgage was now reported as a high revolving type of credit (HELOC) instead of a mortgage since he refinanced a few years ago at prime and paid off his regular existing mortgage. He had many open credit cards with none showing balances. But his equity line was almost maxed out since he uses it to buy real estate. He had no late payments in his file and no public records. Lots of good reported credit. Several credit cards and all with 0 balances. Only one inquiry in five months.
My two questions: is the above possible? Equity lines count against you as a maxed out revolving?
Is a 698 beacon, fair, poor, good or excellent? Would a 698 get him good terms on loans?
pk heres the thing first anything above 650 is good. as scores range from 350 to 850 or something like that second of all refinancing can hurt you if you use a finance company rather than traditional banks. don't ask why but finance company loans tend to be frowned upon.
i don't know why it just does.
[addsig]
His HELOC was done through a major national bank like B of A
very interesting.. you got me www.there.i would look at the credit cards then even though he doesn't owe anything it still shows up as potential debt and cra's being the untrusting souls that they are don't like that either.
being new to investing but have several years in the car bis i now a little bit about this they look at it as a local ine of credit that can be accessed at any time if you had a debt to income ratio of say 50% and you sudinly add a 100,000 line of open credit you have the potental to change your dti by up to another 50% instantly. that is what they are looking at.
698 is just about a grade A score. Anything over 620 can pretty much get you financing for a home fairly easily. How long has your friend had these credit cards? Has he used them regularly? Having a wife as a mortgage broker gives us all the ins and outs of credit. I make new loans all the time and still manage to keep my score above 650. Paying bills on time is THE MOST IMPORTANT FACTOR when it comes to credit scores, PERIOD. Opening new lines hurt it a little, but a regularly used CC or LOC with a very low or no balance will only help your score because it shows that you manage money well. The longer you have them, the better because of the seasoning factor. Meaning you've managed money well over a long period of time. Having 4 different lines will also improve your score. e.g.-credit card, mortgage, auto loan, signature loan. The key is to PAY BILLS ON TIME over a period of time.
Greetings Ricker,
I’m no expert on FICO scoring -- but as cmyke pointed out, lenders like to see a HELOC with a "low" balance, where you state that your friends’ is almost maxed out. Also, timely mortgages payments are viewed very favorably, where again you said your friend paid his off. However, with a 698 he’s should still be in very good shape.