To determine if you qualify for a mortgage loan to buy a home in northern Utah, mortgage lenders will consider your income, your debts, your credit history and a host of other factors. One of the most important, however, is your FICO® score.
What type of score is that? And how much of a bearing will it have on your mortgage loan? Read on to find the information you need.
What is a FICO® Score?
The FICO® score, created by the Fair Isaac Corporation, was introduced in 1989. Since then, FICO® has become the brand of credit score used by the vast majority of mortgage lenders when determining a borrower’s loan options. Scores are three-digit numbers ranging from 300 to 850, and higher is better.
Is Your FICO® Score the Same as Your Credit Score?
While many people consider the terms to be interchangeable, FICO® is just one brand of credit score, the one used by mortgage lenders. A different scoring method, the VantageScore® formula, is the one behind the ratings at popular consumer-friendly credit and finance sites. Both are based on similar factors, but your FICO® credit score and your VantageScore® aren’t identical.
How Will Your FICO® Score Affect Your Mortgage?
If your FICO® rating is in the range of good or excellent, you can expect both more mortgage loan options and access to more favorable interest rates and terms. Conversely, a low FICO® rating can result in higher monthly mortgage payments, and the greater cost could derail your plans to buy a northern Utah home.
What FICO® Score Do You Need to Buy a Home?
Most mortgage lenders consider 800 and above to be an excellent FICO® rating and any number above 670 falls in the good range – that’s the benchmark for the best interest rates and loan terms. With a number between 580 and 670, getting a mortgage may be possible, but the rate and terms may not be ideal. To lenders, a score lower than 580 indicates a risky borrower.
How Can You See Your FICO® Score?
Check your credit card statements, as some banks and card issuers provide their customers with a monthly FICO® credit score. Or, you can use the Discover Credit Scorecard, a program that’s free for everyone, even those who aren’t Discover customers. The FICO® website also offers access to your score, but you’ll have to pay for the service.
Explore Your Mortgage Loan Options Today
It’s only natural to get excited about buying a home and leap into the mortgage loan application process. But when it comes to getting approved for home financing and securing a mortgage with a low interest rate and favorable terms, your FICO® credit score definitely matters.
If you think you need to improve your FICO® score, the experienced mortgage brokers at Intercap Lending can help you determine the best course of action. If you’re ready to buy a home in northern Utah want to get a great mortgage loan, contact us today.