FICO® Scores and Your Mortgage
Until just a few years ago, credit scoring had little to do with getting your mortgage. Loan processors and underwriters would make subjective decisions based on past payment history in determining the credit worthiness of a borrower.
After lenders studied the definite relationship between credit scoring and mortgage delinquencies, things began to change. Clearly half of the borrowers with FICO® scores below 550 became ninety days delinquent at least once during their mortgage term. On the other hand, only one in every 5,000 borrowers with FICO® scores above eight hundred became delinquent.
Loan processors will typically request reports and credit risk scores from at least two of the three major credit bureaus. The better your reports, the better you’ll score, and the easier it will be to get a mortgage loan with good rates and terms.
Never apply for a loan without knowing what each of the three bureaus will report on you. . Remember, FICO® scores play an important role in the underwriting of your mortgage. If necessary, do credit repair before submitting any applications.