Do You Know How Many Credit Scores You Have?

Your credit rating is the biggest factor when it comes to applying for a mortgage.  Many people get taken by surprise by their credit rating if they haven't done a little research first.  There are ways to manage your credit before you apply for a home loan and knowing how your credit is rated is half the battle.

1 Thing You Probably Didn't Know About FICO Credit Scores
Do you know how many FICO scores you have? If you said three or fewer, you need to read this.

By Matthew Frankel

How many different FICO credit scores do you have? Many people think they have just one, since there's only one FICO score included in many sources, such as the free score offered by several credit cards. Others think there are three -- one from each credit bureau. While this is true, each bureau actually has several different versions lenders can see. It may surprise you to learn that, in all, you have more than two dozen FICO scores.

Why use FICO and not anything else?
There are several different types of credit scores, but the FICO score, produced by the Fair Isaac Corporation, is the most widely used by far. In fact, the FICO scoring model is used in more than 90% of lending decisions.

To be clear, I'm not saying that non-FICO credit scores can't be useful. The second most popular scoring model, Vantage Score, and others are based on the information in your credit report and can give you a good general idea of where you stand -- great credit, so-so credit, etc. However, it's important to remember that these scores are most likely not what a lender is going to see when you apply for a new credit account.

Within the FICO scoring model, however, you might be surprised at how many different credit scores you have.

The three credit bureaus
There are three different credit bureaus that use the FICO scoring method to generate credit scores from the information in your credit report -- Equifax, Experian, and TransUnion.

Over the past few years, more and more credit card issuers are offering "free FICO scores" as a perk of card membership. While these scores are the real thing, they only represent one of the three credit bureaus (TransUnion seems to be common).

While the only way to see your scores from all three bureaus side by side is usually to pay for it, you can view your full credit reports from all three bureaus once per year, absolutely free, at www.annualcreditreport.com. This is truly a free service -- not a sales gimmick for a credit monitoring service, so take advantage to make sure that all three of your credit reports are error-free.

But that's not all
In addition to having FICO scores from all three credit bureaus, there are several versions of your FICO score generated by each one.

For starters, these include updated versions of the FICO scoring model, as the formula has been fine-tuned over the years. The most popular version currently in use is known as FICO Score 8, but FICO recently released FICO Score 9, which incorporates certain changes. To name the major differences, FICO Score 9 doesn't count paid collection accounts against you, places less emphasis on unpaid medical bills than the previous version, and counts payment histories on rental housing if it's reported. Some lenders have started using FICO Score 9, but it's not widespread just yet.

There are also industry-specific FICO scores for auto lending, credit card decisions, and mortgage lending. For example, an auto-specific FICO score might emphasize a borrower's previous history with auto loans and leases over other credit information.

• Auto lenders use the FICO Auto Score, and the version depends on the credit bureau. FICO Auto Score 8 is used with all three bureaus, but each has another, previous version available as well.
• Credit card issuers can use the FICO Bankcard Score 8 with all three bureaus, and versions 2, 4, and 5 can be used as well, depending on which bureau they're using to check your credit. In addition, Experian also uses FICO Score 3 for credit card purposes.
• Finally, mortgage lenders use one of three versions of the FICO score -- FICO Score 2 (Experian), FICO Score 5 (Equifax), or FICO Score 4 (TransUnion).

Wait, I have how many different FICO scores?
Between all three credit bureaus, and including the different versions of the FICO score that are used by various types of lenders, there are 28 different FICO scores. And this just includes versions that are commonly used by lenders today -- there could be lenders using outdated versions of these scores as well.

The bottom line is that even if you know what your FICO score is, there's no way of knowing specifically which version a lender is going to be looking at. You can see all your FICO scores on websites such as myFICO.com (for a fee), and there may be some variation between the scores, so it may be worth checking out the full picture of your FICO situation if you're planning to make a large purchase anytime soon.

To view the original article, visit The Motley Fool.

Building Equity

Equity is one of the best bargaining chips you can have when making important financial decisions for your future.  There are many ways to build it.  Making your regular monthly payments, maintaining your property and waiting for the market to increase your property value in time is one way.  But if you're not the type of person who likes to sit around waiting, there are active ways you can increase it as well!

Banks Photos/Getty Images

How Homeowners Build Equity
By Justin Pritchard

Building equity is one of the main benefits of home ownership. You don’t notice it while it’s happening, but at some point you’ve got a valuable asset that can be used for almost anything.

What is Equity?
Equity is the amount of your home that you actually own. If you borrowed money to buy your home, you can calculate your equity by subtracting your loan balance from the value of your home. If you end up with a negative number, you’ve got negative equity – the home is worth less than you owe on it.

Example: your home is worth $250,000 and you owe $100,000 on your mortgage. $250,000 minus $100,000 equals $150,000 of equity in your home. This is the value you can do something with if you sold the home.

How to Build Equity
The more equity you have, the better. There are two ways to build equity:

1. The property value increases
2. The amount of debt decreases

You can take an active or passive approach to building equity, depending on your goals, your resources, and your luck.

Increase the Property Value
Your home’s market value is an important element in your equity calculation. If that goes up, you instantly have more equity. So how does your home rise in value?

Rising prices in your market: if you’re lucky, home values in your market might simply rise over time, without any effort on your part. This is most likely to happen in attractive neighborhoods and growing towns.

Home improvement: you can also invest in your home to increase its value.

Updating kitchens and bathrooms, improving landscaping, and making the home more energy-efficient can all pay off (but there’s an up-front cost, and you need to make sure you can more than recoup those costs). If you’re doing improvements mainly to build equity, pick projects with the highest return on investment (ROI).

Upkeep: routine maintenance is boring, but a home that’s falling apart is not worth much to anybody. You can actually see your home equity decrease if you fail to address issues like leaks and deteriorating roofing.

Decreasing the Debt
Monthly payments: with most home loans, you pay down your loan balance a little bit each month. A basic amortization table can show you the process in action. The longer you have your loan, the more principal you pay (more of each payment goes towards equity, and less of each payment is lost to interest charges). It’s actually pretty easy if you just keep making payments – and you build momentum (with larger and larger principal payments) without even trying.

But you might want to accelerate the process and build equity more quickly. There are several ways to do that.

Shorter term: shorter term loans cause you to pay down debt and build up equity more quickly than long term loans. For example, a 15-year mortgage would be better than a 30-year mortgage. As a bonus, those shorter term loans often come with lower interest rates – that, combined with the fact that you’re paying interest for fewer years, means you’ll actually spend less on interest over the life of your loan.


Extra payments: even if you have a 30 year mortgage, you can speed things up by paying extra. Each extra dollar you pay (above and beyond your required payment) reduces your debt and goes towards your equity – just make sure your lender applies those payments to the principal. There’s nothing stopping you from setting up a 15 year repayment schedule (see the link to the amortization table above) and making those payments on your 30 year loan. If things change at some point and you can’t afford to do that any more, you’ve got the flexibility to go back to the smaller 30-year payment. If that’s too complicated, just send an extra payment from time to time.

Leave it alone: second mortgages and refinancing can interfere with debt reduction. Obviously, if you can save a bundle by refinancing, go ahead and do it. But remember that with most loans, you pay mostly interest in the early years of your loan – so every time you start over, you delay (or at least slow down) your equity building. Borrowing against your home with a second mortgage (or home equity line of credit) clearly increases your debt and reduces your equity.

Forced Savings
Sometimes people refer to a mortgage payment as "forced savings." You might not think you're saving any money by making payments each month, but you are building up the value of an asset (like you would build up the value of a savings account by making regular deposits). With a home, the asset isn't cash in a savings account - it's equity in your home.

What can you do with Equity?
You might wonder what you get out of all that equity. The short answer is that it's an asset that you can trade for other assets.

• If you sell your house, you'll get cash for your equity
• If you're buying another house, you can use that money (or the equity) to help fund the purchase of your new house (and therefore you'll borrow less)
• If you ever need cash, you can borrow against the equity in your home with a second mortgage (also known as a "home equity loan")

To view the original article, visit thebalance.com

We've moved to HomeBridge!

We have a really exciting announcement here at the Peyton Roinnel Team, we've moved to HomeBridge Financial! Our new office is located on 1100 Boulders Parkway, Suite 100. Richmond, VA 23225. Our phone number is (804) 322-3078.

We've decided to make this move because when it comes to mortgages, more specifically renovations and restorations, not a lot of companies in Richmond have expertise with those types of loans and we wanted the ability to do more with them. This is why we have picked HomeBridge Financial. With HomeBridge we have even more control over our loans and we can do so many amazing things for our clients.

We've also built an incredible network of professionals that include: Realtors, Financial Advisors and Contractors; to ensure that we provide support to our clients that go beyond just their home mortgage.

Peyton Roinnel Deckelman is now the branch manager of the Richmond office of HomeBridge Financial, which means we not only have the ability to continue our commitment of great service to our clients, but we have more control and flexibility when it comes to the products we offer.

We are so excited about the opportunities we've been given through this move to HomeBridge Financial and we want to pass along that excitement to our clients!  So if you have any mortgage needs, or just a good recommendation don't hesitate to call, our door is always open!