Mortgage Loan Understanding FICO Scores
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Understanding FICO Scores for Mortgage Loans
When you apply for a mortgage, you'll quickly become acquainted with FICO scores. Here’s a guide to understanding this important scoring process.
What Are FICO Scores?
FICO scores are a numerical summary of your credit history, which includes records of your debts and assets. They incorporate factors such as credit card balances, late payments, and bounced checks. Your FICO score indicates how well you manage credit and the risk level for lenders in offering you more, such as a mortgage loan.
How Are FICO Scores Calculated?
A credit score assesses your history with credit to provide a risk evaluation for lenders. Loan underwriters look at your credit report details like payment history, current debts, and types of credit accounts, all summarized in your FICO score.
The FICO Name
FICO stands for Fair, Isaac and Company, the creators of the scoring formula. Love it or hate it, your assigned FICO score significantly impacts your mortgage prospects.
FICO Score Range
FICO scores range from 350 to 850. A higher score indicates a healthier credit status, increasing the likelihood of loan approval. Banks are particularly favorable to scores closer to 850.
Common FICO Score Range
Most people have FICO scores between the low 600s and high 700s. Typically, a few late payments won’t automatically disqualify you from obtaining a mortgage loan.
Preparing for a Mortgage
If you're planning to buy a home, getting pre-qualified for a mortgage is a wise step. Start by checking your FICO score to understand your credit standing.
By familiarizing yourself with your FICO score and managing your credit wisely, you’ll be in a strong position to secure a mortgage loan.
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