Your FICO Score

Your FICOÂŽ Score The Heartbeat of Your Financial Health

Contact me for more information!

Eric Johnson Loan Officer

Direct: (808) 264-9939

NMLS: 1478179

ejohnson@afncorp.com

AFN NMLS: 237341

http://ericjohnson.afncorp.com

Located at the: Kihei Technology Park | 535 Lipoa Parkway, #199B, Kihei, HI 96753 | Branch NMLS #1431981 *Brokered products may have higher rates or different terms. Please contact loan professional for more details. American Financial Network, Inc. is licensed by the Hawaii Mortgage Loan Originator Company Branch License (HI-1431981) under Nationwide Mortgage Licensing System (NMLS), unique identifier of 1431981. Refer to www. nmlsconsumeraccess.org and input NMLS #237341 to see where AFN is a licensed lender. In all states, the principal licensed office of American Financial Network, Inc. is 10 Pointe Drive, Suite 330, Brea, CA 92821; Phone: (714) 831-4000 (NMLS ID#237341). This information is intended to assist Real Estate Brokers, Agents, and other Industry Professionals, and is not an advertisement for consumer credit as defined in 12 CFR 1026.2(a)(2). This information is not intended for consumers and may not be duplicated or disseminated to the public.

Sometimes referred to as your FICO® score, your credit score offers lenders a quick and objective picture of your credit risk and ability to repay.

The FICO® Score which was introduced by Fair Isaac and Company in 1989 provided lenders with a purely financial evaluation of an individuals credit worthiness exclusive of race, ethnicity, religious affiliation, national origin gender or martial status. Your FICO® Score also doesn’t take into consideration age, current salary, occupation, or employment history, although lenders will take these, and other factors into consideration as part of your overall financial picture.

A FICO® score is the mathematical calculation of a number of different factors.

Each of these factors or data points are given a certain percentage of the whole in determining the amount of risk a lender would be taking in offering you, a credit card, a car loan, a student loan or a mortgage.

Scores range from 300 -850.

The higher the score the lower the risk. The better the score the more credit, and better terms, such as interest rate will be available to you. A review of your credit report and FICO® Score, as well as the lenders underwriting policies, could result in the lender extending credit to you even if your FICO® Score is low, or declining your application for credit even though your FICO® Score is high.

In the event that you are denied credit, the Equal Credit Opportunity ACT ECOA gives you the right to find out why within 30 days. You are also entitled to a free copy of your credit report within 60 days. The credit report can be obtained by contacting the three credit agencies. If your FICO was the primary reason for the denial, the lender will indicate the reasons for the score to explain why you failed to qualify. For more info go to www.myfico.com/crediteducation.

3 Credit Reporting Agencies

1

2

3

Equifax

Experian

TransUnion

There are actually three different agencies that make FICO® Scores available to you and prospective lenders.

Each agency tracks your credit history using the same rigorous methods and compares the results to the general population to calculate your FICO® Score. While FICO® makes every effort to make these reports consistent, your score may vary from agency to agency. Lenders may choose to reference one or all three of these agency reports when processing your application. Two very good reasons to review each the three reports every year.

The agencies are Equifax, Experian, and TransUnion. Each has a different name for their score. Equifax calls their Beacon, Experian has the Experian/FICO Risk Model, and TransUnion’s is the FICO® Risk Score Classic.

When reviewing each of your three credit reports look for mistakes such credit card accounts that might have been added to your report inadvertently. This can happen as the result of a clerical error, such as someone entering an incorrect social security number or incorrectly transferring information from a handwritten application.

Should youhave a dispute you can contact the credit reporting agencies directly: Equifax: (800) 685-1111, www.equifax.com Experian: (formerly TRW): (888) 397-3742, www.experian.com TransUnion: (800) 888-4213, www.transunion.com

Information Contained In Your Credit Report: The information contained in your credit report, and reflected in your FICO® Score, though constantly changing, is intended to give the lender a snapshot of your borrowing and repayment history at a particular moment in time.

Personal Information - Including name, address, social security, date of birth and employment.

Account Summary - The types of credit accounts you use including credit cards, car loans, mortgage, etc.), the length of time those accounts have been open, whether your bills were paid on time, how much credit you’ve used, as well as amounts owed and any “new credit” you have applied for recently. Minimizing the number of credit accounts and making timely payments will give you the best score.

Inquiries - There are two types of inquires, voluntary and involuntary.

1. Voluntary Inquiries are those authorized by you at the time you’ve applied for a loan, and any inquires you’ve made as part of maintaining a good credit score. There are no penalties penalized for checking your credit through the three major agencies or any other organizations authorized to provide credit reports such as www.freecreditreport.com, or www.myFICO.com.

2. Involuntary Inquiries - Credit checks by an employer as well as pre-approval credit inquires do not effect your score. However large numbers of inquires can suggest you’re a greater risk.

Important Note - Regarding Inquires: When shopping for a loan, you’re less likely to affect your score if your inquires are within a 14 day window. The activity in a shorter period signals that you’re shopping for the best loan terms from multiple lenders.

Negative Items - These include delinquencies, unpaid or overdue payments sent to a collection agency, bankruptcies, tax liens, foreclosures, garnishments, legal suits, judgments and public records from state and county courts. Maintaining reasonable debt is fine so long as you pay on time.

Calculating Your FICO® Score: Each of the factors is assigned a weight or percentage to arrive at your total credit score. These percentages are based on the importance of the five categories as they apply to the general population. In particular cases, for example, individuals who haven’t been using credit for very long, or have experienced a foreclosure or some other issue that would effect their credit negatively, the relative importance of each of these categories will vary. It’s important to note that while a foreclosure may lower your credit score very quickly, repairing and improving that score takes time.

01

PAYMENT HISTORY - accounts for 35% of your FICO® Score which includes:

02

AMOUNTS OWED - account for 30% of your total score and includes:

03

LENGTH OF CREDIT HISTORY - accounts for 15% of your score and includes:

04

AMOUNTS OWED - accounts for 10-% and includes:

05

NEW CREDIT - also account for 10% of your total and includes:

A review of all credit card accounts, retail accounts, installment loans, finance company accounts and mortgage loans, as well as delinquent payments, bankruptcies, foreclosures, law suits, garnishments, items in collections, liens, judgements, or other matter of public record.

All types of credits accounts, how many accounts with balances, how much of each individual credit line is being used on revolving lines of credit, and amounts outstanding on any installment loans.

How long accounts have been established, focus on specific types of accounts depending on the type of loan you may be looking for, and how long it has been since you used each account.

The kind of credit accounts you have, and how many of each type - looking for a good mix.

Are you taking on more debt, how many new accounts you have by type, how long since you opened a new account, how many recent requests for credit inquiries you’ve made remain on the report for two years but the score looks at the past 12 months, length of time since credit report inquires were made by lenders - whether you have a good recent history following past payment problems.

So what is a good credit score? Since every lender will view scores differently based on their own risk tolerance, it’s hard to say exactly what a good credit score is. Some lenders may see a FICO® Score of 680 or above as a cut-off, while others require a 720 or higher before they would consider extending credit to a borrower.

7 Steps to a Healthy Credit Score (FICO®) The benefits of a healthy credit score should never be underestimated. Having and maintaining a good credit score can mean savings on insurance premiums, interest on a car loan, as well as interest and fees on your home loan. Here are 7 things you can do to keep your credit score vital

01

PAY ON TIME. All missed and past due payments lower your credit score. Use

02

PAY OFF ANY BILLS “IN COLLECTION.” Work with creditors to modify terms

03

DON’T CLOSE ACCOUNTS. This can lower your rating because by canceling

04

DON’T CONSOLIDATE DEBT USING NEW CREDIT CARDS. Smaller payments

05

KEEP A CLOSE EYE ON YOUR DEBT-TO-CREDIT RATIO. Your total debt should

06

WORK WITH A CREDIT COUNSELOR. If your credit rating is low and you

07

REQUEST A COPY OF YOUR CREDIT REPORT from annualcreditreport.com

auto payment feautres from your bank and set calendar reminders to ensure checks are received with enough time to be processed by the due date.

and get those new terms in writing. Willingness to pay is an important factor in rebuilding your credit.

them you delete important payment history.

made on time to multiple cards is better for your overall credit score than one larger revolving account.

not exceed 30% of your available credit. Apply that same rule to each account to keep on track.

are struggling to pay off debt you may want to consider working with a credit counselor.

annually and review it thoroughly. Look closely for mistakes and contact card companies and lenders to be sure proper corrections are made.

Derogatory Credit Waiting Periods

CONVENTIONAL

FORECLOSURE

MULTIPLE BANKRUPTCIES

CH. 13 BANKRUPTCY

FHA

DEED IN LIEU SHORT SALE MULTIPLE BANKRUPTCIES CH. 7 BANKRUPTCY CH. 13 BANKRUPTCY

DEED IN LIEU SHORT SALE MULTIPLE BANKRUPTCIES CH. 7 BANKRUPTCY

0

1

4 years from discharge

3 years from recorded date 3 years 3 years from sale

2 years from most recent discharge 2 years from discharge

1 year of on time payments & approval from bankruptcy court (discharge is not required)

FORECLOSURE

CH. 13 BANKRUPTCY

5 years from most recent discharge if more than one bankruptcy in past 7 years

2 years from discharge or 4 years from dismissal

FORECLOSURE

VA

4 years from close/discharge

SHORT SALE

CH. 7 BANKRUPTCY

2 years from recorded date 2 years 2 years from sale 2 years from most recent discharge 2 years from discharge

1 year of on time payments & approval from bankruptcy court (discharge is not required)

2

3

4

7 years from recorded date

5

6

7

8

YEARS *Please contact your loan professional to discuss your individual circumstances with respect to waiting periods.

NMLS# 237341

AFN NMLS: 237341

Contact me today for more information!

Eric Johnson Loan Officer

Direct: (808) 264-9939

NMLS: 1478179

ejohnson@afncorp.com

AFN NMLS: 237341

http://ericjohnson.afncorp.com

*Brokered products may have higher rates or different terms. Please contact loan professional for more details. American Financial Network, Inc. is licensed by the Hawaii Mortgage Loan Originator Company Branch License (HI-1431981) under Nationwide Mortgage Licensing System (NMLS), unique identifier of 1431981. Refer to www. nmlsconsumeraccess.org and input NMLS #237341 to see where AFN is a licensed lender. In all states, the principal licensed office of American Financial Network, Inc. is 10 Pointe Drive, Suite 330, Brea, CA 92821; Phone: (714) 831-4000 (NMLS ID#237341). This information is intended to assist Real Estate Brokers, Agents, and other Industry Professionals, and is not an advertisement for consumer credit as defined in 12 CFR 1026.2(a)(2). This information is not intended for consumers and may not be duplicated or disseminated to the public.