What is a FICO Score?
FICO scores are numeric representations of your credit profile. The
higher the FICO score, the better credit risk you are.
FICO is a product of Fair, Isaac Company thus the term FICO. These
have been around for several years but started being used in the mortgage
lending business in 1995 for the purpose of keeping down the expense
associated with Home Equity loans. You are required to have a certain
minimum score to get such a loan. In
1996 both Freddie Mac and Fannie Mae began requiring a FICO score on
credit reports. You can be denied a
mortgage loan if your score is too low. The
scores are based on years of computer modeling aimed at predicting who
might be a credit risk. Their
purpose is to reduce the cost of examining a credit report and speed up
mortgage approvals.
Your FICO score can be determined during the process of becoming
pre-qualified which allows a qualified mortgage professional to review
your credit. Pre-qualifying is a
process whereby a loan officer obtains information about you, either over
the telephone or face-to-face and indicates the loan amount you can
qualify for and the best type of loan to meet your particular needs.
The loan officer will want to know information about your income
and a list of your debts. The
lender, through a series of calculations, will be able to determine the
size of a loan you qualify for based upon loans available in today’s
market. The term pre-qualified
simply means that a mortgage or real estate representative has examined
your income to debt ratios...this does not mean pre-approved.
Pre-approval is a step beyond pre-qualifying.
Pre-approved means that a mortgage or real estate professional has
examined, submitted and received acceptance on your financial capabilities
of qualifying for a mortgage based upon your income to debt ratio, loan
information, and credit profile. In
a pre-approval the credit part of the loan package is sent to the lender
and you get approved for a certain type of loan with a particular lender
before you have found or made an offer on a property.
Landmark Mortgage
specializes in assisting those individuals with obtaining a home
loan whether for purchase or refinance. In
most cases, we can advise you on the best approach and help you with your
specific loan requirements.
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