FICO Scores Explained

By Kelly Wingard
Mortgage Credit Problems Columnist

Featured Home Equity Loan Provider
    • Get your Free Quote in Minutes!
    • Lenders Compete for your Business
    • Lock in a Low Fixed Rate Before Rates Increase!
    • Do you have the Lowest Rate Possible? Find Out Instantly!
Whether you're shopping for your first mortgage or are trying to refinance an existing mortgage, bad credit may make it more difficult for you to obtain a loan. That's why you need to know the score--your personal credit score, that is--before you start shopping around for mortgage lenders. These are the digits that will control your mortgage interest rate and the number of lenders willing to loan you big money to finance a home purchase.

What's a FICO Score?

Fair Isaac Corporation, an industry-leading data analysis company, developed a method to compile personal credit information into a scalable measure for the financial services industry. Dubbed the FICO score, this system uses information from standard credit reports to help lenders assess applicants' credit risks before extending them loans. According to Fair Isaac, lenders make billions of credit decisions each year based on FICO scores.

Know Your Score

FICO scores range from 300 to 850--the higher the number, the better your score. FICO's mathematical formula considers a number of factors in the scoring process, such as your payment history, the amount you currently owe, the length of your credit history, the amount of new debt you are accumulating, and the types of credit you use (i.e., mortgage loans, credit cards, car loans, etc.).

If you are thinking of buying a home or refinancing an existing mortgage in the near future, but are worried that bad credit could hold you back, get your FICO and other credit scores now. While modifications to the Fair Credit Reporting Act gave every consumer the right to a free annual credit report, the companies do charge to provide your actual credit score. However, paying this fee upfront may help you get a lower interest rate in the future. 

Compare New Home Loan quotes in minutes

Property Type:
Credit Rating