MWF Home Loan Trail Guide

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FICO Score FICO Score

What Makes Up My

FICO SCORE?

Credit scores range from 300 to 850 and are designed to predict risk, specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring. Your credit score is one of the determining factors when qualifying for a mortgage. You want to make sure to review your credit report for any discrepancies ahead of time to make sure your score is at the best it can

be for your home loan process. Many people are under the impression that checking your credit in any capacity impacts your score. In fact, data from your credit report falls into five major categories that make up a FICO score. The scoring model weighs some factors more heavily such as payment history and debt owed:

10%

Inquiries: records of inquiries logged when you apply for credit

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Type of Credit: mortgages, installment loans, revolving, etc

.

15%

Length of History: time elapsed since each account was opened

Mortgage Lenders use your credit scores to see your full financial profile, determine your credit risk and then establish the interest rate you will be charged for your home loan. A mortgage credit report may be different than credit reports used by auto financing companies and free credit report monitoring. With a mortgage credit report, you have three FICO scores, one for each of the three credit bureaus - Experian, TransUnion and Equifax. All three bureaus grade your credit history, however, your score will be different from each one because

35%

Payment History: the record of your on-time and late payments

30%

Available Credit: proportion of balance to your credit limit

not all creditors will report to all three companies. The Lender will then take the middle score to evaluate your loan. Lenders will look for: • Delinquent accounts, meaning those paid more than 30 days late • Unpaid collection accounts • A past bankruptcy • Foreclosures • Tax liens or civil judgments • The number of recent applications for credit • Outstanding debts

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