Credit Scores

While credit scores can often be what gets your "foot in the door", there are other factors that are very important to securing a mortgage such as:

• Loan to Value Ratio
• Debt to Income Ratio
• Employment

Credit scores are based on FICO (Fair Isaacs Company) standards and the calculation of the score is very complex. However, below is an overview of what influences credit scores the most.

• Payment history: Payment information on credit cards, installment loans (such as a car loan), mortgage loans or finance company accounts. Are there public record items, such as judgments or bankruptcy, and collection items? Details on late or missed payments, including how much was owed, how late the payments were and how recently they occurred. How many accounts show no late payments. According to Fair Isaac, this category usually determines about 35% of your score.
• Outstanding debt: Amount owed on all accounts and on different types of accounts, such as credit cards or installment loans. How many accounts have balances? How close are you to each credit limit? According to Fair Isaac, this category usually determines about 30% of your score.
• Pursuit of new credit: How many inquiries and new accounts does your report show, and how recent are they? How long has it been since the most recent inquiry? Whether you have made on-time payments to re-build your credit after a period of frequent late payments. According to Fair Isaac, this category usually determines about 10% of your score.
• Types of credit in use: How many accounts are reported for bank cards, travel and entertainment cards, department store cards, installment loans, and so on. According to Fair Isaac, this category usually determines about 10% of your score.

Please note: When qualifying for a Reverse Mortgage, credit scores are not nearly as important as when qualifying for all other types of mortgages.