Posted by Collette | Posted in Credit | Posted on 08-12-2009
I had a borrower tell me he feels like he is just a number. He felt the only thing lenders were interested in was his credit score. I told him he was partly right. Lending money for a home mortgage isn’t like it was in the 1920′s. Then the banker was your next door neighbor or someone who you knew all your life. Or more importantly knew you your entire life. Now days the lender may be in another state or just met your 10 minutes ago. To compensate for this lack of knowledge the credit reporting system was born. Lenders needed a way to see how you have fulfilled your credit obligations in the past to help them determine if they should approve your request for credit now.
A FICO® score is a valuable guide to future risk based solely on credit file data. The higher the score, the lower the risk to lenders when extending new credit to a consumer. The score is an objective measurement of your credit risk at a particular point in time.
While a person’s credit score isn’t the only thing a lender will look at it is one of the first things that is evaluated. Lenders do also evaluate other types of information — such as data you provide on the credit application (for example, income, how long you have lived at your residence, or how much equity you have in your home) in their loan evaluation process. But at the beginning of the process your credit score is the first thing that is reviewed.
Make sure you know your Lender FICO® score. Let me know if you want a copy of your own lender credit report, it takes only moments and it is FREE!
Collette
