Archive for the ‘Qualify for a Mortgage’ tag
FICO Scores vs. Credit Scores
FICO Scores vs. Credit Scores
fico scores vs credit scores
When you apply for a loan, the interest rate that the lender charges you on that loan is determined by something known as a fico score.
Per Suze Orman: Every single person alive (once they have a credit card or apply for any type of credit) has a credit report AND a FICO score. You should be aware that there are three credit reporting bureaus. They are:
- EQUIFAX
- EXPERIAN
- TRANSUNIONEach one of these bueaus has a FICO score attached to it. Therefore you can have as many as 3 FICO scores.
EVERY MOVE YOU MAKE when you pay a creditor, gets reported to one of this bureaus. It’s up to the creditor which bureau they report to. Therefore, its possible that your credit card payment history would be on one bureau, your car loan on another and your mortgage on still another (or any combination of the above).
Remember: (excerpted from: myFico.com) Lenders use a number of facts to make credit decisions, including your FICO® score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.
Here’s what you need to know: Since rate follows risk, if your FICO score is high the interest rate charged on the loan is lower – if you FICO score is low the interest rate the lender charges you is higher. Read the rest of this entry »
