Your FICO (Fair Isaac Corporation) score or “credit score” is more important than ever.  With real estate mortgage defaults being historically high in the past few years, lenders are moving to an era of greater scrutiny.  The FICO score is a three digit number from 300 - 850 mathematically calculated at a particular point in time to determine your risk factor as a credit applicant.  This score can be delivered quickly giving lenders/vendors an opportunity to deliver approval to you. 

           
It is interesting to note that securing those low advertised interest rates is directly related to your FICO credit score—the more favorable your FICO score (closer to 850), the more likely you will be considered for the better interest rate and similarly the further away from 850 your score, the less likely that you will be offered the best interest rate. 

           
           The five factors used to calculate a FICO score are:

           
            35% - payment history

            30% - amounts owed

            15% - length of credit history

            10% - newly opened accounts and inquiries

            10% - mix of credit cards, retail accounts and loans

FICO scores exclude the borrower’s age, race, color, religion, national origin and marital status.  They also exclude where the borrower resides, the borrower’s salary, occupation, employment history, rental agreements, child support obligations and interest rates. 

           
Currently real estate lenders have established the minimum low threshold of 620 as the score for lending purposes.  Below this level a lender has decidedly agreed that the candidate is a higher risk and may not be granted a mortgage.  By knowing what contributes to a healthy credit score you will be a more empowered consumer and make better decisions for your financial future..