Frequently Asked Questions About Credit Scores for Home Loans
A formula, or algorithm that analyzes the information in your credit file and returns a number or score.
Your score indicates your risk to creditors or lenders. The lower the number, the more risky you are determined to be. See: What is a credit score?
Names and addresses the credit bureau believes (rightly or wrongly) have been used by you. Your positive credit history: creditor, type of credit and, if ongoing, the current status of the account.
Your negative credit history: past due payment history, collection accounts. Public records of bankruptcy, repossession, liens and judgements.
The following are not part of your credit file or score:
Your age, race, religion, national origin, gender, marital status.
Employment: your salary, occupation, employer, job history
Personal: alimony or child support or have had credit counseling
Soft credit inquiries: when you check your own credit report or someone sends you a pre-approved offer.
Your bank account activities or interest rates on existing credit or loans.
Excluding some public records concerning taxes, seven years.
Note: this is how long is legally allowed and how long it should be on your report. We often find negative information on credit reports that violate this law.
At least 660 for your FICO score.
FICO scores range from 300 to 850 depending on your assessed risk:
Poor: Less than 580
Fair: 580 - 669
Good: 670 - 739
Very Good: 740 - 799
Exceptional: Over 800
FICO (Fair Issac Corporation) develops computer models to determine lender risk. The level of risk is represented by a number: your credit score. This is the credit score over ninety percent of lenders use.
There are different FICO score models for different types of credit: auto, credit card and mortgage. Mortgages lenders use scores that are different than other scores. The only place to get your FICO scores is from MyFico.
Non-FICO credit scores are called FAKOS. These are not used by lenders and are for educational purposes only. This is the score you often get for free from free credit report websites.
The minimum credit score for a home loan is 620. This is a FICO (not FAKO) mortgage midscore, meaning the middle (or mean) score of all three credit bureaus.
The score model used for mortgage lending is different than that used for auto loans or credit cards. These scores may be different for the same person.
There are only two ways you can get your score that is used for mortgage lending: your FICO mortgage score:
- From a mortgage professional you authorize to check your credit.
- You can get your mortgage FICO scores from myFICO.com.
Scores from free credit report websites are not FICO scores and FICO scores from credit card companies are not mortgage scores.
More about your FICO mortgage credit score…
Your credit score is a measure of you history in using credit. If you use different kinds of credit – keeping all your commitments perfectly – your score will increase over time. History is time, the longer the better.
Your score goes down with lack of credit history, late payments, repossessions, bankruptcy, liens.
Lenders to whom you apply for credit.
Lenders who want to send offers to extend credit (unless you opt-out of these offers.)
You when you request them.
Your employer, or prospective employer cannot see you credit score, but they can see much of your credit history by getting an Employment Credit Check (only with your permission).
No. Rich, middle class and poor people can all have high scores - or low scores.
Your credit score is a measure of your ability to keep credit commitments. Lenders use it for this purpose, not how much to lend.
Your income, and debt, determine much credit you can afford and how much credit lenders will extend to you.
What is a credit score?
There are a lot of different credit score models.
Different score models, based on different credit histories equals different credit scores.
How do I get my credit score for buying a home?
The credit score used for home buying is your FICO® Mortgage Midscore. And there's only two ways you can get it.
- From a mortgage lender after you’ve applied for a loan.
All lenders who check your credit are required to tell you your scores. You can ask the lender after they’ve checked; or wait until you receive their official disclosure in the mail. If your loan was denied, you'll also be told the reasons you were rejected.
- From myFICO.com .
Your 3-bureau report will have your scores based on different models. Look for the mortgage scores section, and take the middle score of the three bureaus (see example). These reports are not free.
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