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The Role of the FICO Score
If you have bad credit history and you are looking to get a home mortgage loan, then you are going to need to know all about how the FICO credit scoring system works.
FICO - Fair ISAAC & Company - is the leading credit reporting agency that lenders turn to when it comes time to credit scoring your home loan mortgage application; so if you do have bad credit history, these guys will know.
The higher your FICO score, the better chance you have of getting that home loan and the more negotiating power you have in getting a lower rate.
If you have a FICO score lower than 500, then there is little chance you will get a mortgage loan.
500 - 600: You should be able to get a home mortgage loan, provided you are willing to make a down payment.
600 - 640: You should get a 100% home loan financing. With no money down.
640 - 700: You should be able to be approved for a 125% home mortgage loan.
700 +: You're in the drivers seat! You should be able to get an excellent rate with excellent terms.
Your score depends on each credit report, so before you apply for a mortgage loan, you should get a copy of your credit report and make sure there is nothing on it that shouldn’t be there. Be sure to have anything fixed before you apply for the loan.
Wait until after you have purchased or refinanced before you buy anything additional on credit. Not doing so could have a negative effect on your mortgage approvals.
Your score is only part of your home mortgage loan application. If you don't succeed in getting your home loan, then don't give up. There may be other lenders willing to lend to you.
People with bad credit often don't understand how the credit scoring system works. It is beneficial to find out more about it when looking to get a home loan with less than perfect credit to bad credit or when dealing with sub prime mortgage lenders.
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