1 year, 8 months ago
via credit-qna.com
Which score do mortgage lenders use your credit score or your FICO score?
If a FICO score and a credit score aren't the same thing which one is used to determine eligibility for a mortgage loan? I have always heard it was the mid-score of your three credit scores that mattered, where does a FICO score come into play?
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M$1 Answer
In evaluating your credit worthiness, majority of mortgage lenders utilized the credit scoring system developed by Fair Isaac Corporation. Based on the FICO score, mortgage lenders will tag borrowers as below prime if they have a score of at most 620, while those borrowers with a score of 650 will be good but with some caution and a borrower with a score of 720 would be considered first rate.
However, you must bear in mind that the ultimate determination whether or not to grant you a mortgage, will be the creditor in spite of your credit score figures, since there are other factors that maybe taken into account, such as your disposable income, status of employment and the percentage of your overall debt compared to your total earnings.
Accordingly, "some lenders specialize in loans to borrowers with low scores. However, the lender will likely ask you to produce extra documents such as bank statements and W2s to support your application, and you may have to pay a higher interest rate."
However, you must bear in mind that the ultimate determination whether or not to grant you a mortgage, will be the creditor in spite of your credit score figures, since there are other factors that maybe taken into account, such as your disposable income, status of employment and the percentage of your overall debt compared to your total earnings.
Accordingly, "some lenders specialize in loans to borrowers with low scores. However, the lender will likely ask you to produce extra documents such as bank statements and W2s to support your application, and you may have to pay a higher interest rate."
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