CREDIT SCORES ARE EVER-CHANGING

What do you do if your credit score is high enough to obtain the rate and product you are seeking, but is not as high as you think it should be?

"Leave it alone," says Southwest Florida mortgage broker Frank Cicione.

"This is not an ego trip," Cicione advised his colleagues who were taking a four-unit continuing education course in understanding credit scoring at the Florida Association of Mortgage Brokers annual convention last week in Tampa.

"If it ain't broker, don't fix it," he told the class.

Not messing with a good thing is sound advice for consumers. Why? Because trying to improve your score could actually result in a lower score, not a higher one. Some steps to a higher number are counterintuitive, such as opening a new account and closing out an old one, a step that you could really mess up your score.

Another common mistake borrowers make is showing up at a broker's office with a credit score that has been purchased over the Internet. More likely than not, Cicione told the class, the score you have in your hands is going to be 50-60 points lower than the classic FICO score the mortgage business goes by.

"It's going to be lower than our industry-specific score almost every time," the 36-year mortgage industry veteran said of generalized scores designed for sale to consumers, but not businesses.

A savvy broker trained in the nuances of credit scoring will advise borrowers right away that the score they purchased off the Internet is not the same as the one used by lenders so that there will be no surprises.

But if your broker didn't mention that and the score he receives is much lower than the one you pulled, don't be alarmed. He's not trying to rip you off by forcing you into a higher-rate loan.

Cicione, a broker in the Ft. Myers area who was president of his state trade association in 1999, also pointed out to the class that mortgage scores are nothing more than a "snapshot" of the consumer's credit profile at a particular point in time. "Thirty-days later," he said, the score "could be very different, even if they don't do anything rash," like buying furniture or a new car on time.

Credit scores "are active things," he said. "They're vibrant, and a new score is generated every single time" an inquiry is made.

To understand why you didn't score better than you expected, Cicione told the class to ignore late payments and look instead to the four reason codes or key factors given with each score.

"These codes are your roadmap," he said. "They are listed in the order of importance or weight causing a negative impact when calculating the score. And they should be relayed back to the consumer to explain how they can change their credit profile and increase their score over time."

Although other things often contribute to a lower score, he added, the reason codes list the more important problems that lead to lower scores. And here's another tip: While four factors will be listed, the first two "are the ones you really want to pay attention to," according to the long-time broker. "The lower ones are probably not worth worrying about."

Published: July 26, 2006

by Lew Sichelman

Realty Times