Click here for a printable copy of the mortgage jargon you will come across during the mortage process.

The FICO score is simply a prediction of a 90 day late within the next 24 months. With a FICO score of 600 or below the model predicts a 1 in 8 chance of a 90 day late. This prediction is made with the analysis of the factors mentioned below and the percentage of impact that each causes. There are several Fair Isaac Credit models. The mortgage industry uses the Classic Model. In this model, scores range from 300 to 850. The median score nationwide is 720

• The three measures in this category are recency, frequency, and severity.
• Recency = When did it happen?
• Frequency = How often has it happened?
• Severity = How late they were?
• The two big time hurdles are 7 months old and then 2 years old.
• Mortgage lates do not affect score differently than revolving lates, however can have a major impact on mortgage lender offerings.

• High charge ups to limits on revolving debt. (has direct correlation with 90 day lates)
• Hurdle points = above 50% usage to limit is bad, and above 75% usage to limit is a big negative.
• Usage to limit is measured 2 ways:
  • Cumulative totals of usage to limits. (That is the total usage on all revolving debt relative to total of all limits on revolving debt)
  • Per card usage to limit. (However, small balances are actually more positive than zero balances at the time credit is pulled from a per FICO stand point, not necessarily from a DTI stand point.
• The model only looks at the balances the day credit is pulled and does not go back in time.
• High balances on installment debt are not near as detrimental as they are on revolving debt.
• There is an unknown limit on a revolving debt account that is high enough that the model automatically assumes that the debt is a HELOC and does not include it in consumer revolving debt.
• AMEX can be much more damaging to credit than other cards because often AMEX reports highest usage as the limit rather than actually reporting a limit. At any given time this can make your usage to limit look high if you are at or near your previous highest usage.

• How long have you had credit, the longer the better.
• Opening new cards actually lowers the average age of your consumer/revolving credit, which can be detrimental.

• The model is looking for a good mix of credit. i.e. installment, mortgage, revolving, etc.
• It looks at both opened and closed accounts.
• One very negative type of credit is Finance Company Accounts (the buy now pay later type of programs)

• The model only looks at the last 12 months of inquiries.
• You are allotted between 5 and 7 inquiries per 12 months.
• Inquiries can drop your score by 5 to 15 points per inquiry.
• Promotional inquires don’t affect your score. (these are for example credit card solicitations, they already pulled a promotional inquiry that does not affect your score. However, if you respond to the solicitation they will do a hard pull which will affect score.)
• Insurance company inquiries are also soft and act like promotional inquiries.
• Mortgage inquiries within the last 30 days only count as one inquiry. Then as the model looks at the past 12 months, and other mortgage inquires that happen within a two-week timeframe of each other only count as one additional inquiry.
• Automobile inquiries work in a very similar fashion relative to other automobile inquiries.