If you are looking for a brand new home or car and you are also looking to refinance your mortgage, your FICO score will play a vital role in your approval or denial. The FICO score is a three-digit number that was calculated by the Fair Isaac Corporation (FICO) that represents how possible it is that a borrower will default on a mortgage loan, auto loan, or credit card. Plus the likelihood that you will file an insurance claim.
A credit score is mainly based on the details from your credit files, usually from the three major credit agencies, such as Equifax, Experian (Formerly TRW) and TransUnion. Lenders such as credit card firms and banks use your credit scores to assess the possible risk posed by lending money to you and to lessen losses because of bad credit.
In addition, this score will be critical in determining your interest rate on your mortgage. Before filing out any application for a mortgage loan, you need to consider checking your FICO score first because it can help you organize the other requirements needed for your mortgage application.
Aside from checking your score, you also need to look through your credit files to make sure that there are no errors in your history that can be corrected. Get all 3 copies of your free credit reports from the government’s annualcreditreport.com site. Several people are asking about the minimum FICO scores for a mortgage and if they fail to meet the exact score, what do they have to do.
Bankrate stated that the minimum score that is acceptable to acquire a mortgage loan is about 620, as of last year. On the other hand, Guy Cecala, the publisher of Inside Mortgage Finance, said that the lowest possible score to acquire a loan with the best available rates as of last year is about 730. So if you are looking to acquire the best rates, your FICO score must preferably meet or surpass the last mentioned score of 730. This will give you the best possible chance of securing a mortgage for your dream home.
So how do you stack up? Check your FICO score absolutely free from MyFICO – the leader in FICO score reports.