How's your FICO Score?

Since we live in an computer-driven society, it's not surprising that your ability to obtain a  mortgage may boil down to a single number. The FICO score is built by credit reporting agencies. These agencies use the payment history of your various loans: mortgages, car loans, credit cards, etc.

All three major credit agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a credit score. The original FICO was developed by Fair Isaac and Company. Experian uses this model and calls its score FICO. Equifax's model, based on FICO, is called BEACON, while TransUnion, which also uses a slightly modified FICO, calls its score EMPIRICA. While each of the models considers a range of data available in your credit report, each agency uses the following to determine your credit score:

  • Credit History - How long have you had credit?
  • Late Payments - Do you have a history of late payments?
  • Credit Card Balances - How many accounts? How much do you owe?
  • Inquiries on Your Credit - How many times have lenders pulled your credit report for the purpose of lending you money?

These factors are assigned weights based on the formula being used. Each formula produces a single number which may vary slightly from one agency to another. FICO scores range from 300 to 850. Higher is better. Most home buyers will probably find their FICO scores falling between 620 and 800.

Not just for qualifying

Credit scores are used for more than just determining whether or not you qualify for a mortgage. Lenders give lower interest rates to individuals with higher scores.

Can I improve my FICO score?

What can you do about your FICO score? Fortunately we do offer a free service to help improve your credit score for the purpose of buying or refinancing a home. Give us a call and let our experts apply their magic. You should, of course, appeal to  the credit agency to remove any incorrect data from your credit report. 

How do I find out my FICO score?

In order to raise your FICO score, you've got to have the reports that are used to build it, and of course, you need the score itself. Fair Isaac has created a web site (www.myFICO.com) that lets you do just that. It's inexpensive, fast, and easy to get your credit score as well as credit reports from all three agencies. Also available are information and tools that help you understand how to improve your FICO score.

You can get a federally-mandated free credit report once a year from the three major credit reporting agencies at AnnualCreditReport.com. You won't get a free credit score from AnnualCreditReport.com, but getting it is fast and very inexpensive.

Armed with this information, you will be a more informed consumer and you'll be better positioned to get the right mortgage for your needs.

Want to know more about credit scores? Call us at (303) 650-9400.

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