Saturday, March 01, 2008

FICO Scores: Are They So Important for Getting a Mortgage?

During the last few decades, we moved many modern times from topographic point to place, buying and merchandising houses and other property. To my knowledge, not even the most respectable bank that carried our mortgage ever had anything to make with any FICO score. I first heard “FICO score” mentioned, about six or seven old age ago, when one of my children worked for a mortgage company, and I establish out from him that FICO score have been around since the 1950s, after Fair, Isaac and Co. (therefore the acronym FICO) developed a certain method to determine the credit hazards of borrowers.

FICO scores range from 300 to 850, the higher the better. The bulk of scores are in the degrees of 600-700. The desirable 1s are 720 and higher. FICO scores are designed to mensurate the hazard of delinquency by considering respective past times and present issues, such as as the length of credit history, promptness of payment, current debt including tax liens and money owed as a consequence of a tribunal judgment, recent searches by the consumer to obtain credit, and the amount of credit received up to date. The exact expression for obtaining the FICO scores, however, is held secret and--it beats out me, but--this behavior is accepted by the Federal Soldier Trade Commission.

Three nationwide companies, Experian, Equifax, and TransUnion, usage the FICO scores for credit reporting. All three of these companies are required by law to supply the consumer—you—with A free credit report every twelve months.

You might ask: “If we have got got the FICO scores, then why make we have a credit report? Aren’t FICO scores enough?” Type A credit report is more than than a FICO score. A credit report gives extra information on you, as to where you dwell and have got lived, whether you had a run-in with the law, and if you were sued or filed for bankruptcy. The FICO score, as a general rule, is attached to the end of a credit report.

Your credit report is important. The information in it have to be up to day of the month and correct, because it will be used not only for the purchases you make, but also when you are applying for a job. You need to get your credit score and take measurements if the information in it is not rectify or have go stale. Consumer reporting companies are required by law to rectify anything incorrect or inconsistent after they look into your claims.

To obtain your free credit report, you might see authorship to each 1 of the three companies (Experian, Equifax, and TransUnion) and getting a separate credit report from each one. Don’t be surprised if you happen small differences among these reports because each company makes its ain calculating in its ain way. Getting all three reports is especially necessary if you happen something inconsistent in your credit history and you need to rectify it with all three of them.

If you experience your credit history is good, the best manner to get your free credit report is getting a word form from Annual Credit Report Request Service (http://ftc.gov/credit), and filling and sending it to P.O. Box 105281, Atlanta, gallium 30348-5281; or if you wish, you can get it online from annualcreditreport.com.

Do not, at any time, believe in the companies or online land sites that promise to get you your free credit report. Most of them eventually inquire for fees and start charging your credit cards, because you have got got accepted their services and they have your information in their hands.

Does every lender wage attention to the FICO score? Luckily, not all; although most may. Inch the beginning, FICO scores had small or nil to make with mortgage lending. About five or six old age ago, however, mortgage lenders realized that there was a certain connexion between the negligent behaviours of borrowers and their credit scores.

After a couple of old age of heavily relying on the FICO scores, mortgage companies are beginning to change their attitudes on the topic again. Lenders like Fannie Mae and some private mortgage companies make their ain probes as well as taking into account your credit report as a whole.

A few tips before applying for a mortgage:

* Bash not go forth or change your job, especially if you have got worked there for some clip and you are not replacing it with a more than secure and better paying job.

* Brand certain your credit cards are not charged to the max.

* Bash not ever be late in paying your existent mortgage. At least, don’t be late for more than than a month.

* Discuss and deal with small lenders (Dept. Stores etc.), businesses, and aggregation agencies to take any late payments.

* If you have got a federal student loan, seek to take “default” Oregon “collection” labels from the loan’s history.

* Get into the wont of paying your measures on time.

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