I had a potential call me to get a pre-approval. I asked if he have any idea what his credit score was . He said he went on line and it was 900+. I advised him that that score was impossible because credit scores range from 300 to 850. The credit scoring mechanism used by mortgage lenders is called a FICO score. This credit scoring pulls its scores from three different credit bureaus, Experian, Trans Union, and Equifax. Credit scores affect the interest rate you will qualify to receive with your mortgage.
The higher your score, the lower will be your rate, and conversely, the lower your score, the higher will be your interest rate.The range of scores under the FICO scoring model is 300 to 850. Lenders use the scoring model to determine what is known as risk base pricing. In other words, folks with higher credit scores are considered the best risk. As scores go down, the risk to the lender increases. Therefore, your goal should be to attain as high as possible credit scoring as possible. Here are the FICO score ranges.
- 760 – 850 (best interest rate)
- 700 – 759
- 680 – 699
- 660 – 679
- 640 – 659
- 620 – 639 (higher interest rate)
You are entitled to one annual free credit report from each credit reporting bureau yearly. To get yours Free, go to: https://www.AnnualCreditReport.com Once you know your score, you will be able to view any derogatory credit that is influencing your credit. This will give you an idea of the action you need to take in order to improve your credit score. If you have a high credit score, Congratulations! Keep up the good work. Eventually, all lenders (including us) will want to pull our own tri-merge credit report to see if you qualify for your purchase or refinance.
If you still have questions, please call our office at (302)266-9500 or click on the button below to fill out our online contact form.