Sam Richards GRI, Broker/Owner
BRE License #01305588
April 16, 2014
Real Estate Q & A
Q. I understand the top FICO score is 1000, and I have a 650. What do I need to do to get mine to 1000? D.K. Rio Vista
A. The Fair and Isaacs Company Score, FICO, was initially developed for the automotive industry to streamline acceptance or denial of a prospective purchaser, or which finance companies might make a loan. With further refinement it is now universally accepted by lenders everywhere. First, a few facts: the score range is a low of 300-350, while the top is 850. Scores of 760-850 are excellent, 700-759 very good, 660-699 is good, 620-659 is below average, 580-619 is poor, and anything below 579 is very poor. Your most lendable range is 640 to 850, but interest rates are not as good for the lower scores.
The FICO evaluation is scored on 5 categories: 1) length of credit is 15%, 2) number and types of accounts opened recently, 10%, 3) the mix of accounts such as credit cards, department stores, finance companies bank loans, etc., 10% 4) your record of timely payments 35%, 5) your amount of debt outstanding is 30%.
If your score falls, your credit card company will charge higher interest, and you may be denied loans.
To raise your score, check your credit report for anything in collection, like that cable bill you didn't want to pay, medical bills, student loans, or anything showing late or no payments. Then contact these companies one by one to negotiate a payment plan or a buy down. If you have some cash, don?t pay off credit cards, pay them down by half (you should never exceed 50% of your card limit anyway). This shows you have credit you could use but are able to manage your affairs without living on credit cards. This one move could raise your score by 25-50 points!
The one we run into most frequently is no loans, no credit cards, and no score! You can't live on a cash basis, so open a credit card and go have some fun, but pay it off in 6 payments. It will take some time, but in 1 to 2 years, you could be in the house buying range.
For a home purchase, you don't need cash, you need credit. Because we are in a farming community, you can get a USDA loan for 100% financing with a good FICO score.
Email our lender, Tim, at firstname.lastname@example.org for more details.
Q. I am offended that you turned me down for a rental because my dog is a Pit Bull. My dog is fun, funny, loving, and has demonstrated an ability to socialize with strangers in a playful manner. This dog is a part of our family, and I guess you did me a favor that I won't be renting from someone like you. Proud Pit Bull owner, Rio Vista
A. I think you are the gentleman that called in, but we were disconnected before I could explain. I believe everything you are telling me about your dog; a family is the dog's pack, and your dog obviously sees you as the pack leader, and you have spent quality time with him to make him part of the family.
We contract with home owners for perimeters on what they will allow regarding pets, and home insurance is the real driving authority. Insurance could be cancelled for Pit Bulls, Rottweilers, German Sheppards, Collies (yes, even Lassie), Dobermans, or basically any dog that has a reputation to be an attack dog. We've even had insurance drive-bys that see a sign that says "guard dog" and the owner has to explain.
Send your questions to email@example.com or visit: www.richards-realestate.com