Choosing a lender isn't the first step in becoming a homeowner. The content of your wallet begins the home buying process. Without an acceptable FICO score, buying a house is more difficult and, you could find yourself renting longer than you expected in Austin until your score improves.
The Fair Isaac Company bases your FICO score on the summary of your total credit history. Most people usually have a score of 600, but scores range from 300 to 850. Job loss has been common in the last few years, but FICO scores aren't necessarily adjusted "on a curve." A low score is just that and often means you can't get a loan.
How much do you owe versus how much credit do you have available?
CREDIT TO DEBIT RATIO
CREDIT INQUIRIES
TYPES OF CREDIT
PAYMENT HISTORY
How much do you owe versus how much credit do you have available?
In reviewing your credit history, you'll see that you actually have three reports. Experian, Equifax, and TransUnion — three of the major credit reporting agencies — use a slightly different system to calculate your credit rating. FICO is used by Experian. Equifax's model is called BEACON and TransUnion uses EMPIRICA. You have a credit score with all of the bureaus.
Lenders want to be positive that giving you a loan is a safe move. Your FICO score gives lenders an insight into what type of borrower you'll be sole because of your credit history. Because of the shift in the economy, most home buyers should have scored in the range of 740 or higher to get a decent interest rate. If your score is less than that, you can still qualify for a loan, but the interest accrued in the long run could be more than double the amount of an individual having a stronger credit score.
We're used to working with all tiers of credit scores. Call us at 512-241-1707 and we can help you get on the right track to the home of your dreams.
Improving your FICO score takes time. It can be difficult to make a significant change in your number with small changes, but your score can improve in a year or two by keeping tabs on your credit report and by using credit extended to you to raise your score, instead of ruining it. The most important thing is to know your FICO score. You'll improve your credit score by using these helpful hints:
Now that you're better informed about credit reporting, you'll be able to successfully take the first step in owning a home, and that is improving your FICO score. Know that when it's time to apply for a loan to purchase a house, you'll want to keep your applications within a two-week window to avoid damaging your credit score. With the help of IREAF, LLC, the loan process can be a stress-free experience so you, too, can become a homeowner.
Get more information by visiting myFICO.com, Fair Isaac's informational site and you can review all of your credit reports for free each year at annualcreditreport.com. And, for a small payment, you can get your FICO score from each bureau on their websites: equifax.com, experian.com, and transunion.com.
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