What are Credit Scores?

Credit Scores also known as FICO (Fair Isaac Co) score are scores from three major credit agencies Experian, Equifax and Trans Union.  They range in scores from 350-850 with 850 being the best and 350 being the worst.  You receive a score from each one of the Agencies and they are usually all different.  The reason they are not all the same is that creditor do not always report to all three agencies. These number will help determine your credit worthiness to potential lenders for mortgage, auto loans, credit cards and personal lines of credit.

What helps determine your credit score?

• Payment history (35% of the FICO score)
• Debt/amounts owed (30%)
• Age of credit history (15%)
• New credit/inquiries (10%)
• Mix of accounts/types of credit (10%)

If you have three scores what score is used?

For mortgage purposes when a person has three credit scores one from each agency, we use the middle credit score if just one borrower or if you have more than one borrower you use the middle score of the lowest borrowers score.  For example; If you have a score for borrower 1 of 813, 723 and 760  you would use 760 as their credit score.  if you had a second borrower and their scores were, 683, 720, 646. than the credit score used would be 683 of the two borrowers.

For mortgages this credit score number helps to determine your interest rate.  The higher the score the better your rate will be.  If you had a credit score over 720, you are deemed to have excellent credit.  660-720 you have good credit, 580-660 fair credit below 580 credit is considered poor.  Some investors will allow you to get an FHA mortgage with credit as low as 500, but in my experience this would have to be a manually underwriting loan and they become extremely difficult because it requires one to pay of collection accounts.

If you would like to learn more about what your credit score is and how to qualify for a mortgage please fill out the information on this page or call Bruce Singer at Vision Home Mortgage, 702-217-5525.