How new FICO score visibility may help you
Based on the recent Fair Isaac change giving consumers access for a fee to the most commonly used FICO score for mortgage lending decisions, consumers now have even more transparency around their FICO score, and they can have that extra information well before they apply for a mortgage or a pre-approval.
With mortgage rates still near all-time lows and the spring home-buying season near, this FICO information is a welcome tool many potential home buyers and owners considering refinancing may want to consider leveraging.
There are numerous versions of your FICO score. Previously, consumers could buy their FICO scores online or get them for free, but those versions were not the FICO score most widely used by mortgage lenders. The new information may help consumers judge the interest rate they may qualify for and help them decide if they want to seek a mortgage or a pre-approval or wait and try to improve their FICO score before seeking a mortgage.
Knowing the FICO score that a potential mortgage lender may use as part of the loan approval process can certainly be helpful.
That said, focusing on your credit score alone may not improve your financial picture. While knowledge is important, even more important is taking the right steps to build a solid credit foundation. If you concentrate on managing your overall financial well-being – including using credit responsibly – chances are you’ll end up with a stronger credit score. Here are a few building blocks for financial success:
- Pay your bills on time
- Borrow only what can afford
- Pay down debt
- Avoid excessive credit applications with multiple lenders, which can lower your credit score
- Maintain a strong employment record
- Have a savings plan
Also, don’t forget that other factors besides a FICO score influence your ability to borrow and the interest rate you may qualify for. In addition to lenders’ own internal underwriting criteria, some of factors that influence rates and loan approvals include the size of your down payment, the type of home you buy, the percent of your income that will go to your monthly mortgage expense.
With rates still near all-time lows and more credit score information at your disposal, it may be the right time to try to find that home of your dreams or to consider refinancing options to help make your current home more affordable.