We hear about it all the time…you need a good FICO score, but do you know what that means, or how it can effect getting a home loan? A FICO score is a credit score developed by Fair Isaac & Co, and it is a method real estate lenders and mortgage brokers use to determine whether or not it is likely you will pay your bills. FICO scores started being used in the late 1950s, and they have become widely accepted by real estate lenders as a reliable means of credit evaluation. And as you may or may not know, a good credit evaluation is vital in ensuring you get your home loan. A FICO score, or credit score, attempts to condense a borrower’s credit history into a single number, and in this case, the higher the better
Many mortgage brokers and real estate lenders base how much they will lend you on how high or low your FICO score is. The number these lenders determines to be good can vary from state to state and may depend on what’s going on in the housing market at the time you are trying to get a home loan. That being said, you are usually going to be ok with a FICO score of 700 or higher. Again, real estate lenders and mortgage brokers have to base the number on how big a risk they can take at any given time, so it’s always good to know the current standing of your FICO score, especially if you are in the market for a home loan.
Credit scores analyze a borrower’s credit history considering numerous factors such as:
- Late payments
- The amount of time credit has been established
- The amount of credit used versus the amount of credit available
- Length of time at present residence
- Negative credit information such as bankruptcies, charge-offs, collections, etc.
There are really three FICO scores computed by data provided by each of the three bureaus––Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.
So, if you are in the market for a home loan, or if you think you may be in the future, it’s always a good idea to know what your FICO score is. For more information on this or anything else regarding buying or selling property, visit us at www.iappraiseforyou.com or contact firstname.lastname@example.org