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With all of the tightening credit guidelines, it would be nice if your credit score mattered a little less these days, but nowadays it matters more than ever!  It used to be that people with generally good credit got about the same interest rate as people with really good credit and people with generally not-so-good credit got a little worse rate.  Well let me tell you that the game has changed!

The lending business has always been a “risk-based” business, but the current guidelines for conforming and jumbo-conforming loan amounts are much more complicated today.  In order to determine your interest rate, the lender may look at as many as five different levels of down-payments (ranging from between 10% to 40% down) and as many as eight different levels of credit scores (ranging from less than 620 to above 740) before determining your interest rate.

In other words, credit scores matter more now than they ever did before, so keep your credit clean!  How do you do that?  Well, the FICO score from Fair Issac Corp. is used by one of the three major credit reporting agencies (Experian), and here’s how they score you.  Each of five types of information counts to make up your credit score – payment history (35%), amounts owed (30%), length of credit history (15%), new credit (like inquiries, 10%), and types of credit in use (10%).

Let me know if you have any questions about your credit worthiness.  Jay Friedman, senior loan consultant at jay.b.friedman@chase.com or (805) 585-2326.  Happy house hunting.