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FICO Scores
FICO is a score developed by Fair, Isaac and Co. FNMA
(Fannie Mae) and FHLMC (Freddie Mac) now require that loans
sold to them must include credit reports with FICO scores.
If your FICO score is above 680, you may be considered an
A+ borrower and the loan will qualify for streamlined (probably
computerized, automated underwriting) financing. These
loans can be approved in as little as just a few minutes. The
lender will not ask as many questions, and you will have
a good chance to receive the lowest market interest rates
available and can close your loan quickly.
If your credit score is between 620 and 680, the lender
will look at your file a little more closely and determine
if there are potential risks. You may still qualify
for an A rating, but your underwriting time will be a little
longer, and additional documentation and letters of explanation
may be required before loan approval.
If the score is below 620 a lender may want to see strong
offsetting factors that will justify approving the loan. You
will not be eligible for the lowest interest rates. You
may be diverted to other than FNMA or FHLMC funding sources. You
will be less than an A rating and may take more time to find
a lender as well as get approval
The following will reduce your FICO score:
- More than just a few open accounts
- A number of open accounts with balances.
- A number of accounts with balances close to or at their
limit.
- A large number of inquiries from creditors.
- A number of accounts with derogatory information.
- A number of collection accounts, tax liens or judgments.
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