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
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
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.