Poor Credit Home Mortgage Loans - The Role of the FICO
Score
By Carrie Reeder
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
Carrie Reeder is the owner of ABC Loan Guide, an informational website about
various types of loans. The site has many informative
articles and the latest finance news.
Article Source: http://EzineArticles.com/?expert=Carrie_Reeder
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