How Important is your Credit Score?

Part of the Video Series Banking Secrets & Advice

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Find out how banks judge your credit score in this free video on insider banking and finance advice.

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Posted by thelightings on Monday, 28 April, 2008 at 8:30 PM

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Video Transcript

How Important is your Credit Score?
Okay, so to recap the first evaluation step of income, the DTI, that debt to income ratio being less than 50%. The way the banks look at that is they take your year to date pay stub and your last year's W2 and they find what the average is for a month. If you're self-employed, they're going to look at 2 years of your tax returns and you're going to look at your adjusted gross, and that's before taxes. Okay, so that covers income. Step 2; the second thing they're going to evaluate is your credit score. Now, this is one of the most important factors to a bank. Right now, the industry is shifting a lot so this is becoming more and more crucial. With your credit they like to typically see the credit score at 680. Now, that credit score is called your fico, and they look for the mid. There are 3 reporting agencies or bureaus. Equifax, experian, and transunion. Those guys evaluate your credit worthiness and then give you a risks score. That's called you fico. Now, the middle of those 3, whoever's score is in the middle, is the one they take and they look for a minimum 680. They prefer to see it up over 720. That's the second evaluation point they look at. Do you have any questions on that? No. Okay, so the second thing they're going to look at is your credit score.

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