What do Credit Report Reason Codes Really Mean?

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Whenever I review someone’s credit report, they ask me about the “Reason Codes” which follow the score. Each scoring model was designed to give everyone the opportunity of obtaining the highest score in each category.

Let’s examine the Experian scoring model. Your Experian “Mortgage Score” has a range of 330-830.

 

  • 35% (approx 175 points) of the score is payment history
  • 30% (approx 150 points) is the amounts owed or debt utilization ratio
  • 15% (approx 75 points) is the length of credit history
  • 10% (approx 50 points) is your new credit
  • 10% (approx 5o points) is the types of credit or your credit mix

 

It is possible a reason code will not be listed next to your score. If a particular reason code is not listed, you have scored the maximum number of points in that section of your score.

When applying for a mortgage, inquiries are very important. Inquiries may be a “red flag” to you underwriter. As approvals are based on debt ratios, an inquiry may indicate new debt, not yet listed on your report. If you ratios are near the maximum, new debt may be the difference between owning your dream home or not. The credit bureaus often include all inquiries for the past 24 months but only those within the past 12 months are considered.

 

If you would like to get your Experian Credit Score and Report, you can find out for only $1* at Experian.com. I will be happy to review your report with you and make suggestions for improving your score. You can reach me @ 775-250-4421 or email dougkaller@renomortgagecoach.com


*IMPORTANT INFORMATION:
When you order your $1 Credit Report & Score, you will begin your 7-day trial membership in Triple Advantage®. If you don’t cancel your membership within the 7-day trial period**, you will be billed $14.95 for each month that you continue your membership. You may cancel your trial membership anytime within the trial period without charge.

 


 

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