The Credit ABCs: An Introduction to Credit in Lending

An Introduction to the Credit ABCs

Have you ever wondered how your credit score is calculated, how to establish “good” credit, or why your scores vary when different creditors pull your credit report? If so, tune in to my new miniseries, The Credit ABCs. Based on my experience as a mortgage professional, I will review not only how credit works, but the dos and don’ts of establishing and maintaining good credit.

In Part 1 of the Credit ABCs I introduce you to the world of electronic credit scoring. Here are the main points:

1. Mortgage lenders use the following scoring models: Equifax – Fico classic 05, Transunion- Fico classic 04, and Experian- Fair Issac 02. We consider all three bureaus, but your middle score is the qualifying score. Other creditors, such as car dealerships and credit card companies, use different scoring methods. The free credit report you can obtain online uses only one bureau and does not necessarily use the same scoring models.

2. Trade lines found on a credit report include: mortgages, car loans, student or personal loans, and credit cards. If you have any outstanding judgments, collections, or tax liens, those will also be reported on your credit report. Rent, phone bills, and utilities are not included.

3. When your lender pulls credit, the information is typically 30-60 days old. If you’ve recently paid off items and would like that to be considered with your loan approval, be sure to alert your lender.

USDA Property Eligibility Areas Revised June 4th, 2018

On June 4, 2018, the new ineligible area maps for the Rural Development Single Family Housing (SFH) and Multi-Family Housing programs will be updated

USDA loans are zero-down, government insured loans available for borrowers who want to purchase in USDA designated rural areas. USDA property eligibility is determined by USDA rural area maps. Updated maps on the USDA Income and Property Eligibility Site at

All properties for new applications must be located in an eligible rural area based on the new eligibility maps

However, a property that is located in an area being changed from rural to non-rural may be approved if all of the following conditions are met:

  1. The application is dated and received by the lender prior to June 4, 2018 and the Loan Estimate was issued by the lender within 3 days of application receipt.
  2. The applicant has a signed/ratified sales contract on a property that is dated prior to June 4, 2018.
  3. Applicant meets all other loan eligibility requirements.

Call me if you are interested in a USDA loan, or with any mortgage-related questions!