When it comes to being approved for a home loan, few things are more important than your FICO score. But what exactly is a FICO score and why does it carry so much weight? Let’s explore together.
FICO Scores 101
A FICO score is a three-digit number that is a summary of your credit report. The number is based partly on how much credit you have and how long you’ve had it. It’s also influenced by how much of your available credit you are using and whether you’re paying late or on time. Your FICO score isn’t the same as your credit score, in one sense, but in another sense, it is. That’s because it’s one type of credit score. The most important thing to remember about your FICO is that it affects how much money you can borrow for a home purchase. It also impacts the length of your loan and your interest rate. The better your FICO, the better your interest rate, of course.
How to Improve Your FICO Score
Because your FICO score is a reflection of your credit standing, you can easily improve it. Isn’t that wonderful news? One way to do this is to simply pay your bills on time. Another is to make sure you don’t get into too much debt by making purchases you can’t comfortably afford. Also, if you don’t have a credit card, it’s wise to get one – and put just a few small monthly purchases on it. As you pay these on time month after month, you’ll begin to build credit and your FICO will go up. Raising your FICO is extremely beneficial since over 90% of top mortgage companies – including Fairway of the Carolinas – use it for lending decisions. With a higher FICO, you’ll be more attractive to mortgage companies and in a much better position to secure the loan you need to buy the home of your dreams.
What’s a “Good” FICO Score?
The answer to this important question really depends on the mortgage lender and the kind of loan you need. A FICO score that might get you one type of loan might not get you another. Similarly, different lenders might view the same FICO through a different lens. In general, mortgage lenders consider FICO scores of 670 and above as an indicator of good creditworthiness. To find out what your FICO needs to be for the home you’re looking to buy, contact us at Fairway of the Carolinas. To learn more about FICO scores, click here. We look forward to hearing from you and serving you with excellence!
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