Raising Your Credit Score but Which is the Correct Credit Score?
There are many Credit Consultants that will not tell you the whole truth about Credit Scores. You would think that discovering your credit score would be easy, but it is not. Most Credit Experts will try and sell you a credit report with your credit score. The challenge is there are so many different credit scoring models, what they sell you is most likely not the score lenders use in making a lending decision.
It seems logical that all scores would be the same, unfortunately they are not. Different scoring models use different grading systems and point allocations will vary. I have seen swings up to 100 points between the FICO and Vantage scoring models.
The main company who calculates your credit score is the Field, Isaac Company commonly known as FICO. This is the preferred score provider and only Credit Score that mortgage lenders will use. FICO is the only scoring model recognized by Fannie Mae, Freddie Mac and Ginnie Mae. FICO invented the concept of Credit Scores and have remained the leaders in the industry. Let’s look at a few facts about the FICO score:
You can only go to www.myfico.com and get your FICO score directly from them. They will offer you the option to get your credit score right now and then, if you wish to monitor your FICO score with Equifax it will update the score as it rises (Hopefully it does not lower).
If you are applying for a mortgage, here’s a little good news for you. You can find out your credit score for free! The mortgage company will base their decision and interest rate on your middle FICO score, so just ask and they’ll tell you!
FICO scores range between 300 and 850. Here’s what those scores mean:
- Over 740 – you have excellent credit and you meet the highest score category for mortgage lenders
- 660 to 739 – you still have very good credit and will be able to obtain most any mortgage loan based on your credit score but pricing adjustments apply for mortgages
- 620 to 659 – Generally this is the minimum requirement for FHA loans and USDA loans.
- 580 to 619 – You have a less than average credit history and obtaining a mortgage will be very difficult
- 579 and under – Need to work on your credit for loan options to be available
Knowing the above information makes it obvious that if you need or want to get credit for something, the higher your score is, the better your chances are to not only get credit but get it at a decent interest rate. If you are in the 580 to 660 range, you may still get a loan, but the interest rate is likely to be higher.
We cannot stress the importance enough for maintaining a good credit history and establish good credit.