Mortgage Loan - Understanding FICO Scores

Apply for a mortgage loan and you’ll soon go familiar with FICO scores. Here’s A primer on the ill-famed FICO scoring process.

FICO scores are merely a mathematical mental representation of your credit record. Credit records are simply a recording of your debts and assets. Credit card balances, for instance, are a debt that appears on your credit record, as make late payments, bounced checks and so on. Credit, of course, is a huge consideration in the mortgage loan process.

A “credit score” is a figure that stands for an overall evaluation of how you manage credit and the hazard degree associated with giving you more than credit, to wit, a mortgage loan. The loan investment banker will reexamine your credit report for points such as as payment history on debts, debt balances and types of credit you already have. A summary of this information is represented by a figure known as you “FICO score.”

FICO

You may be surprised to learn that “FICO” doesn’t base for any credit-related terms. Instead, it stand ups for Fair, Isaac and Company. This company developed the mathematical expression that bring forths the much loved or hated FICO scores. The FICO score assigned to you determines whether you love or hatred the formula.

FICO scores come up in a range of three figure numbers. The lowest FICO score you can get is 350. The highest FICO score is 850, a score for which bankers will bow down at your feet. The higher your score, the better your credit state of affairs and the more than likely a bank is to supply you with a mortgage loan.

Most people make not have got perfect credit. To this end, we happen most people have got FICO scores ranging from the low 600s to the high 700s. Mortgage applications typically are not rejected because of a few late payments.

If you’re considering buying a house, you should always seek to pre-qualify for a mortgage loan. Getting a reading of your FICO score should be one of the first steps.