When you buy real estate, lenders run all the reports from the “big three” credit bureaus. Each credit reporting agency lists your credit history as provided by individual lenders and includes government records. Each report assigns you a credit score number. Credit scores reflect your theoretical default risk to lending institutions.
Software developed by Fair Isaac and Company generates your “FICO score.” Experian uses a system called the Fair Isaac Risk Model, a computer program that rates you with a score based on information from Experian. Equifax bases the scores on the BEACON programs and TransUnion bases the scores on the EMPIRICA models.
your baseline
You have three credit scores, often called FICO scores, one from each credit bureau. The lender takes the median score as their baseline. Lenders have different standards, but generally a “C” score is around 500-600, a “B” is around 600-680, and an “A-” is over 680. Over 700 is the magic number. that catches your attention. longed for If your score is below 500, find a private financer or partner with good credit while you work to improve your score.
How lenders rate you
Credit Score Mortgage Financing Available
720 – 800 Excellent! you get what you want
700 – 719 Wonderful! Get the best rates and terms
680 – 699 Good! You get good rates and terms
660 – 679 Very good. You pay higher costs and fees
640 – 659 Acceptable score if there is good income
620 – 639 Weak. He needs a good income and some money
600 – 619 Poor. Use a creative loan agent and pay more loan costs
580 – 599 Almost impossible without a large down payment
Less than 580 Work on fixing credit without delay
What doesn’t count in your credit score
The scoring model does not calculate:
gender age
Race
Whether you own a home or rent
Length of time at your current address
Job or length of employment at your job
Entry
Education
Marital status
Whether or not you were turned down for credit.
Real estate lenders don’t just consider your credit score when applying for mortgage financing. Understanding your credit score helps you with this part of your mortgage requirements.
Copyright © 2005 Jeanette J. Fisher – All Rights Reserved.
