Understanding Your Credit Score (FICO)

Most house-hunters looking for a
mortgage have probably heard terms
like “FICO Score” and “Credit Score,” or
even euphemisms like “strength of your
application.”
Credit scoring is a means of applying a
sophisticated mathematical model to a
consumer’s credit behavior. Simply put,
does he or she pay their bills? It helps
lenders determine if a borrower is likely
to pose any type of credit risk. It’s important
to remind them that late payments
can affect their credit score quickly and
re-building good credit can take between
six and 12 months.
A FICO score is a summary of an individual’s
credit history from the three major
credit bureaus: Equifax, TransUnion
and Experian. Since each credit bureau
collects credit data differently, an average
of the three bureau scores is often the
best assessment of an individual’s credit
history. FICO scores range from approximately
300-850 in the U.S. with the average
score around 678. A score between
620-659 is typically considered fair credit,
660-749 good credit, above 749 excellent
credit, and below 620 poor credit.
M&T C AN HE L P YOUR C L I ENT S ACHI E V E THE DR E AM OF HOME OWNE R SHI P.
UNDERSTANDING CREDIT
(FICO) SCORES
M&T Bank –
Your Mortgage
Partner
Please keep in mind, consumers are entitled
to one free copy of their credit report per
year from each major credit bureau. All
your buyers need to do is visit www.annualcreditreport.
com or call 1-877-322-8228 to
obtain their free credit report.
Encourage prospective homebuyers to review
their credit before they start shopping
for a home. Even when they are confident
they have good credit because they pay
their bills on time, they may be surprised to
find out there is an error on their credit report.
Sometimes another individual’s credit
information may appear on their report
in error. This can happen when someone
shares the same name. It’s important for
your buyers to take the time to correct
items that may not be accurate.