Get Free Credit Score – FICO Report

Jack Tanner asked:




Asking, “How is FICO determined” is a good idea before applying for a loan or mortgage.

FICO is your individual financial score card. The initials stand for Fair Isaac Corporation, which is the firm that designed this commonly used credit score determination software.

If you want higher credit levels and lower interest rates, you need to up your FICO.

Scores range from 300 to 850. Higher scores mean greater creditworthiness. Scores over 750 are excellent, over 720 very good and over 660 acceptable.

Anything under 660 is considered questionable or risky. The average score is about 715.

A person with a score of 620 or less will probably pay about 1.5% more in interest than someone with a score of 760 or higher. Depending on the principle of the loan involved, that could add up to hundreds of dollars a month in extra payments.

This is why it’s important to keep your FICO score as high as possible.

Five basic financial factors are used to determine your score: payment history, debt to credit ratio, length of time of accounts, number and type of accounts and number of recently opened accounts and inquiries.

If you do what you can to score as high as possible in each of these five categories, your overall score will be much higher, resulting in better credit and lower interest rates.

The first thing considered is your payment history. It counts for about 35% of your total score. The amounts you regularly pay on accounts, past due payments and length of time to get up to date are all considered.
So it’s important to pay all overdue accounts and, if possible, get late payments erased from your file before applying for credit.

Second in importance is your current outstanding debt to credit ratio. This adds up to about 30% of your total score. You can do two things to improve your rating in this area: pay down outstanding debt and/or get lenders to increase your credit limit. They’ll usually do this if you’re in good standing.

How long you’ve had your accounts adds up to about 15%. The longer your history, the higher your score. That’s why it’s important not to cancel inactive accounts. It’s better to make small purchases to keep these accounts active.

Having different types of credit accounts – credit cards, bank loans, mortgages, etc.- contributes to about 10% of your total score. The greater the variety, the higher your score.

New Credit and recent credit inquiries are usually negatives that account for 10% of your score. So the fewer, the better. That’s why it pays to move slowly in opening new accounts.

Establishing good credit and maintaining a high score takes time. In understanding how is FICO determined, realize it doesn’t happen overnight. However, it’s never too late to begin.

Since a small increase in your score can make a huge difference in the cost of borrowing, improving your credit rating is definitely worth the time and effort.

Bernard

Bill Burress asked:




Homeowners who think they can’t refinance their real estate mortgage because of a low FICO score or bad credit, need to think again. There are many homeowners today who got caught up in the mortgage loan implosion. This occurred after foreclosure rates went up and the more lenient loan programs were eliminated as a result of foreclosures increasing. These homeowners may have got into their home loan mortgages with low qualifications and low FICO scores and now they cannot get out of them. Some borrowers are in adjustable rate mortgage loans where the interest rates continue to rise. As the real estate mortgage crisis continues, lending guidelines continue to get tighter, increasing the number of homeowners who cannot get refinanced.

In the face of the lending underwriting guidelines getting stricter, the real estate market does not seem to be cooperating. As the number of foreclosures and bank owned properties goes up, real estate equity goes down due to the declining real estate markets. As the equity shrinks on real estate, the credit denials increase. The reason for this is of course, lower equity increases the risk of the lender.

Many homeowners who have been told, “NO!” for a mortgage refinance may have given up on trying. They may have given up too soon. The future may be brighter for some who apply. Right now there is a program available 95% loan to value with cash out to those with low FICO scores and in some cases can go to as low as a 530 FICO score. The interest rate for this low equity loan program is about the same as the best conforming rates for borrowers with 20% equity or more.

The loan program is far more lenient than standard agency loan programs which are Fannie Mae or Freddie Mac approved. This will help many homeowners perhaps get out of the jam they are in buy getting them refinanced into a lower rate and help them take some cash out too. The first step is to contact a seasoned mortgage expert to assist you in your mortgage refinance.

Amber

Carrie Reeder asked:




If you have bad credit history and are looking to get a home mortgage loan, then chances are you are going to need to know all about how the FICO credit scoring system works.

FICO – Fair ISAAC & Company – is the leading credit reporting agency that lenders turn to when it comes time to credit scoring your home loan mortgage application; so if you do have bad credit history, these guys will know.

The formula used by FICO cannot be disclosed because of a decision made by U.S. Congress. There are some things generally known about FICO which that could help you understand why and how you can get approved:

1. The higher your FICO score, the better chance you have of getting that home mortgage loan. Also, the higher your score, the more room you have to negotiate a lower interest rate.

2. If you have a FICO score lower than 500, there is very little chance you’ll be getting a mortgage home loan.

That said, if you have a score of:

500 – 600 you should be able to get a home mortgage loan, provided you are willing to make a down payment.

600 – 640 You should get a 100% home loan financing. Thats right, with no money down.

640 – 700 You should be able to be approved for a 125% home mortgage loan.
700+ You’re in the drivers seat! You should be able to get an excellent rate with excellent terms.

3. FICO depends on each credit report, so before you apply for a home mortgage loan, if you have bad credit history, get a copy of your credit report and make sure there is nothing on there that shouldn’t be there. If there is, get it changed before you apply for the home mortgage loan.

4. Wait until after you have purchased or refinanced your home before you buy anything additional on credit. More loans or higher balances can have a dramatic effect on your mortgage approval, regardless of whether or not you had over a 600 FICO score before you bought on credit.

5. Remember, the FICO score is only a part of your home mortgage loan application, so if at first you don’t succeed in getting your home loan mortgage, don’t give up. Some lenders may still be willing to lend to you!

People with bad credit often don’t understand how the credit scoring system works. It is beneficial to find out more about it when looking to get a home loan with less than perfect credit to bad credit or when dealing with sub prime mortgage lenders.

To view our list of recommended bad credit mortgage lenders online, visit this page: Recommended Bad
Credit Mortgage Lenders

Shannon

Sani Orman asked:




Many times due some delays in paying our bills or the credit card payments, we have a bad credit score. Some have has this problem to the extent that they had to file bankruptcy to save them selves. Now these people have a tough time applying for home loans and FHA loans. There are three major agencies that allot credit scores in the US. On the top of them all is FICO.

What is FICO score?

Fair Isaac Corporation (FICO) assigns score between 300 and 850 to the person that describes his / her credit worthiness. That is the FICO score. This score would decide the rate of interest you will have to pay on any credit or loan. The higher the score, the more is your credit worthiness. Hence you shall land up paying less. And the reversal of this applies for the bad scorers.

What is the minimum FICO credit score requirement to get a mortgage loan?

One thing you must understand is that there are no preset rules in this regard. Basically there are some thumb rules that guide such applications. Nothing here is hard & fast. Various loan programs require different levels of minimum acceptable credit scores. When it comes to home loans at the end it is the mortgage company’s own wish if they want to give you the loan or not.

VA or FHA loans = 580 or more
USDA loans = 620 or more
Conventional loans = 720 or more

On an average, the persons who are above 620 in their score do not have much difficulty. It won’t be wrong to say that it is a safe limit and one should try never to fall below that.

Do I have any ray of hope to a home loan?

With the new Stimulus Package, the Federal Government is giving out FHA loans and VA loans quite liberally. They understand that people are going through a tough time and having low credit scores is quite understandable. The new law has not set any minimal acceptable credit score. So you can actually get lucky and get a loan. For this you may contact the counselors appointed by US Federal Housing & Urban Development (HUD) Department.

Raymond

Rachel Rishul asked:




The global economy has been very unstable since the third half of 2006 and it really caused a lot of problems for borrowers in different parts of the world. Because of this, most of the leading developed countries in the world increased their interest rates. The interest rates in the U.K. also increased by five times in the 12 months between August 2006 and August 2007.

Since 2007, the credit scores of consumers played a very important role in the mortgage application process. Freddie Mac and Fannie Mae found out that most of the borrowers with low credit score are far more likely to default on their home loans compared with the consumers with higher credit scores. Because of this, the requirements for home loans became stricter than before. Consumers are now required to have high FICO scores if they want to qualify for the lowest mortgage rates.

According to study, a FICO score of 620 can sometimes qualify for a home loan. However, they will need to pay higher interest rates and points compared with consumers having higher scores. On a $100,000 home mortgage, this could cost you an extra $35,000 in interest over the life of the loan.

A consumer that has a FICO credit score between 620 and 639 will have a rate of 5.661 percent. People with credit score between 640 and 659 will have a rate of 5.115 percent. People with higher credit scores will have better rates especially if you are between 760 and 850. You will have a rate of only 4.072 percent. (Rates current as of November 2010)

However, it does not mean that you will not be qualified for a low rate home mortgage if you have lower credit scores. You can still avail these loans but you will be paying extra fees and additional expenses. That is the big different between people with low FICO scores and people with high FICO scores.

When you have a FICO score of above 740, you can already have an assurance that you can have the best interest rates from conventional home mortgage lenders. Most of the time, risk-based pricing tiers shift about every 20 points. It only means that if you currently have a FICO score of 680, you will need to pay 1.5 points at the closing or you will need to pay a higher interest rate.

This is the main reason why a lot of people are trying their best to make their credit scores higher. They can have a lot of benefits when they are applying for a loan. You are better off waiting 6 to 12 months improving your scores before applying and getting a better mortgage rate.

Sheila

Michael Petrone asked:




Many people who are having a rough time staying current on their bills because of the economy are ruining their credit score by sending in payments in late or even not at all. Many people are struggling so bad that they have to or already filed for bankruptcy in order to save themselves any further problems. Now these same people are finding it difficult to find a loan or FHA loan. In the US three major agencies allot credit scores and FICO is on top.

What exactly is a FICO score?

FICO, Fair Isaac Corporation, is an agency that assigns credit scores to Americans. The scores range from 300-850 and they determine a persons credit appeal. What the scores determine is whether you will have a high or low interest rate on a loan. So the lower your score is the higher your interest rates will be and it will also be more difficult to find a lender that will give you credit. The opposite applies as well.

Minimum FICO credit score for home loan?

There are currently no rules in place to determine this. Different loan programs have varying minimum credit scores that they find acceptable. It comes down to the lenders whether or not you get approved for a loan.

Conventional loans = 720 or more

USDA loans = 620 or more

VA or FHA loans = 580 or more

People that have a score of 620 or above usually don’t have any problems obtaining a loan. It is a safe bet that this is the safe zone and you should really not fall below that.

Is there hope for a home loan?

Currently the government is giving out VA and FHA loans frequently because of the new Stimulus Package. The government understands that the economy is hurting peoples credit because they are having a rough time making ends meet. With the new law there are still no minimum acceptable credit score. Look into meeting with a counselor while looking for a loan, they are appointed by the HUD Department, Housing and Urban Development Department.

Alan

Ben Afzal asked:




Lender Types

There are lenders who specialize in borrowers with a FICO score of below 500.

Most other mortgage lenders will generally not work with borrowers who have a credit score below 500.

It is important to know that the credit score is the “midscore” of three different credit scores most people have on their credit scores. It is the middle score of the three scores on your credit report.

Loan Types

Lenders may offer regular loans such as a 2/28 (2 year fixed) loan or an interest only mortgage.

Lenders may approve loans to borrowers who are self-employed and have FICO scores below 500.

Also, borrowers do not necessarily have to document their incomes. They may be able to state their income rather than documenting it.

Most Important Factor

Mortgage lenders will usually only lend up to 65%-70% of the value of a property.

This amount of equity gives the lender some security in making the loan. There is enough equity in the property for the lender to recover their loan if the borrower stops making payments.

Bankruptcy and foreclosures will not necessarily stop these borrowers as well.

You may also be able to get the loan without a prepayment penalty.

Investment Properties

Lenders may opt to lend on investment properties as well for 500 FICO scores or less.

It usually helps to have substantial equity in the property.

Interest Rates

The mortgage rates on these types of loans generally tend to be higher than for people with bad credit.

Eric

Alan Lim asked:




When you apply for a home mortgage loan, you will realize that there are a number of requirements that you have to accomplish, before you can finally be approved and obtained additional funding. One of these is your FICO score.

What Is FICO Score?

FICO stands for Fair ISAAC and Company. This is a professional credit bureau that is being looked up to by numerous lenders. The data they can provide will help them evaluate if you’re capable of paying your debts as well as how much you will be entitled for, if ever you get approved by your lending company. Simply put, it provides your credit rating.

How Can It Affect Your Home Mortgage Loan?

The logic for this is very simple. Lenders will never be able to extend very huge loans to people who have poor FICO score. They won’t be able to enjoy too better loan terms. Normally, if you have bad credit rating, the interest rate for your home mortgage loan will be considerably high. Moreover, the payment term will be shorter than those extended to people with better credit score. If you’re applying a loan to reputable lending companies, you will likely be denied of your applications if you don’t have excellent FICO score.

What Are the Advantages of Having a FICO Score?

Besides having a home loan with low interest rate, you can also have the chance to negotiate your interest charges. This way, you can still bring down your monthly repayments and save more money out of your home loan. FICO score will also speed up the process of approving your loan. You don’t have to wait for weeks before you can obtain the money that you definitely need.

What Is an Ideal FICO Score?

A FICO score that ranges from 600 to 640 is considered to be the most ideal, and there’s a guaranteed chance of availing home mortgage loan. What’s more, you can even request your lending company to automatically give you 100 percent financing. This means that you don’t have to make any down payment or pay any fees before you can enjoy the home mortgage loan. If it’s going to be between 500 and 600, you may still be able to obtain a home loan, but you may have to pay a down payment as well as other costs. You can also expect your interest rate to be slightly higher and the length of your repayments much shorter. Sadly, if it’s going to be below 500, you better try your luck next time as it’s almost impossible to obtain a loan with this kind of rating.

Is There No Way to Obtain a Loan with Bad FICO Score?

To put it bluntly, you will decrease your ability to obtain a workable loan if have bad FICO score. As a matter of fact, there’s bigger chance of getting denied than getting approved. It doesn’t mean, however, that you don’t have any option left. There are still a number of companies that may use other factors, besides FICO score, in determining whether you deserve to be given a loan or not.

Jared

Donna Lopez asked:




Obtaining the cheaper most mortgage loans is the thing that you are looking for a long time. You would be amongst the newbies or the first time homeowners who want to have the best deal for mortgage. Although the California mortgage rates are quiet affordable still getting easy and profitable mortgages in California is hard. The hidden reason behind is the credit ratings which serve as a base of mortgage financing.

In the U.S.A. a standard system is practiced by the credit reporting agencies. With a view to arrive at a trustworthy credit rating the companies work out their scores on the basis of FICO. From the huge array of credit evaluation techniques the FICO scores are well accepted and commonly known. It is propounded by the Fair Isaac and Company which rates the scores between the ranges of 300 – 800. Most of the borrowers in the U.S.A. fall in to the range of 600-800.

If you want to obtain low mortgage rates the good FICO credit ratings is the key to success. A high score depends on a number of things but predominantly it is a reward for all your commitment that you show while paying your bills on time. Where you need to find a viable California mortgage loan these ratings serve as basis of loan approval.

Considering the importance of the FICO ratings we are going to discuss the best ways to improve your credit worthiness. Some of the prominent techniques to boost up your credit ratings are explained as under;

1. The very first step to attain a sound credit rating is to pay your bills on time. The late payments can adversely affect your ratings and can dip it down.
2. Try to use the automated ways of paying bills in order to avoid the pin point hassle that occurs in writing checks.
3. Curtail the number of payments that you make through your credit cards so that you may restrict your balance from getting down.
4. In any case if you are planning to have a new major investments do wait for the best opportunity with the lowest possible rates.
5. Being out of money or bankrupt is the utmost avoidable situations that can affect you negatively.
6. Maintain all the accounts clearly set off that you are paying for as it can be a basis of your good rating.

The important aspect of credit is not just obtaining that but to hold that for long. Keeping the same credit pace you can attain a profitable rating that will ultimately help in getting easy and low rate mortgages.

Ray

Alan Lim asked:




When you are in a situation when you have poor credit but you want to refinance your mortgage, the best way may be to think of applying for a bad credit mortgage refinance loan. This kind of loan may offer higher interest rates and longer payment periods, but by applying you may just get lucky and get loan terms that best fit your needs. Here are some ways that you can prepare to apply for such loan that will help you in your situation.

Research

Be sure that you do the proper research on the different lending firms and banks that specialize in bad credit mortgage refinancing. Getting as many as you can, will offer you a variety of choices to check over and decide on. Create a matrix that will help you clearly compare the different loan terms that each offers. With this useful matrix, once all the fields are filled up, it will give you a clear picture on which loan to take and which not to.

FICO Score

Check on your credit report and make sure it is accurate and properly calculated. There have been some instances when the calculation of a FICO score has been erroneous. If you find any errors, be sure to report them straight away so that you can fully take advantage of the fact that you can probably apply for a loan with lower interest and more beneficial loan terms for you.

Refinancing Terms

With the many lending firms and banking institutes that are competing to offer the best service, when you have narrowed down your choices to three lending firms, make sure you get the best deal that fits your particular situation. Sometimes some terms are negotiable. Try your best to get the best terms that will help you save and will relieve you of your debt as well.

Alternatives

Many programs today offer bad credit mortgage refinance loans with great terms. The only drawback is that these programs are made for specific class of individuals. There are housing loan that are up for grabs for individuals who have special circumstances, like single mothers or even the handicapped. If you fall within a class that has special circumstances, it would be worthwhile to check out the loan opportunities that may be most beneficial to your situation.

These are some best practices that will help you get the bad credit mortgage refinance loan that best fits your needs. With this information, you can now begin steps to see if refinancing your home will get you the savings or agreeable payment terms that will best fit your finances.

Laura