Many articles have been written about the importance of having strong credit. And nowhere is the health of your credit more vital than when you apply for a home mortgage. For most individuals, a house is the most expensive thing they will ever purchase and the overall health of your credit determines whether or not a loan company will offer you an budget friendly home loan. Since the most typical measure of monetary health is a credit score, most potential buyers are urged by well-meaning sources to "check your credit score before you apply." Many would-be homebuyers head to the Web to do just that, and seeing that their score is adequate, they head off, score in hand, to meet with a financial institution to discuss possible loans.
And then the loan company drops the bomb - "Sorry, but your credit score is too low. You don't qualify for the best interest rate."
What happened? How can the credit score you purchase from the credit bureaus be higher than the one the lender receives? The answer is a basic one - there is more than one type of credit score. Each of the three main credit agencies - Equifax, Experian and Trans Union, uses a different technique of determining credit ratings. While the scale and criteria they use are roughly the same, the method is slightly different at each agency, so checking with all three bureaus could possibly provide you with three distinct scores. Or even four - the three bureaus are now also making use of a unified scoring method. But which one is the "correct" score?
Mortgage lenders almost always examine the FICO score, created by Fair, Isaac, and Co. The FICO score is similar to a lot of others, but it's the one that lenders are checking. That means that if you want to know exactly where you stand ahead of time, you need to check your FICO score yourself. And you need to create sure that the number you receive is, in fact, your FICO figure and not several other arbitrary score.
How can you do that? There are many places on the Internet where you can obtain a credit score, but not all of them will offer the FICO figure. Make certain that the site you visit offers the FICO score before you agree to pay. Equifax makes the FICO figure readily available on their site, as does MyFICO.com. If you aren't sure, you might check with one of those two Websites. Making sure you have an accurate representation of your monetary health before applying for a mortgage is a great idea. Just make certain that you’re looking at the same measure of financial health that your loan provider will use - your FICO score.
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