hen applying for a loan, and to determine what
mortgage loan, you'll interest rate you'll pay.
likely encounter the term
"FICO" at some point. And even if Of course, there are other
you don't hear the phrase factors that influence these
mentioned, FICO is there in the decisions, but FICO plays a
background, affecting your leading role. In other words,
chances of loan approval and your FICO score helps mortgage
influencing your interest rate. lenders determine your credit
worthiness, how likely you are to
So what is FICO, and how does it pay off your debt, and what risk
affect your chances of qualifying category you fall into.
for a mortgage loan?
The higher your FICO score the
FICO is a computerized better, as evidenced by the
credit-scoring model named after scoring brackets below:
the Fair Isaac Corporation, the
company that developed it decades 650 - 850: The "go ahead"
ago. category. Low risk to lender.
Applicant has good chance of
How FICO Affects You: qualifying for a mortgage loan.
The big three credit-reporting 620 - 650: The "possible"
bureaus - Experian, Equifax and category. Moderate risk to
Trans Union - use the FICO lender. The lender will likely
scoring model to convert your request more information from the
credit history into a credit applicant to base their
score. Mortgage lenders in turn qualifying decision on.
use that score to decide whether
or not you qualify for a mortgage 620 or below: The "risky"
category. Highest risk to lender. Paying off credit cards will
Applicant will probably have help, but it's best to take a
trouble obtaining a mortgage more preventative approach:
loan.
Pay your bills on time. Don't
FICO Factors: apply for credit too often.
Minimize your debt (to improve
Your FICO score is based on your your debt-to-earnings ratio). In
credit report (which is your other words, keep a clean
credit history on paper). Your financial record.
credit report includes such
things as: Conclusion:
* Your debt-to-income ratio Think of FICO as a little man
* Number of credit cards held watching how you handle your
* Credit card balances finances ... peering over his
* Other outstanding debt librarian-style glasses and
* Payment history scribbling notes onto a
* Payment delinquencies clipboard. Give him good things
to write about, and you'll have
How to Keep a High FICO Score: less to worry about when you
apply for a mortgage loan.
There aren't any "quick fixes"
when it comes to raising your * Copyright 2006, Brandon
FICO score. Improving your credit Cornett.
is a gradual, cumulative process.
About the Author:
Brandon Cornett is the editor of http://HomeBuyingInstitute.com, one of the Internet's largest and most respected libraries of home buying information -- more than 100 expert articles in 12 different home buying categories! Put this knowledge to use by visiting http://www.homebuyinginstitute.com.
Source: www.isnare.com
