FICO Rules!

When a lender checks your credit report they receive one or more credit scores. These come from three main credit score vendors and are based on a proprietary statistical model. They are often collectively known in the industry as FICO score, after Fair Isaac and Company, which is one model. Vendors normally receive up to three scores, ranging between 450 and 850. The most common rule used by underwriters is the middle of three scores, lesser of two, and the one if only one is returned. Some lenders require at least two scores. When there is more than one borrower on the loan the score used is normally that of the primary wage earner. The credit score is used by the lender as a measure of risk. Lower credit scores have experienced more credit problems, or have less experience with debt. As FICO goes down, the rate goes up and the maximum allowable loan amount and LTV come down. Most states have rules that allow you one free credit report every year, or if a certain number of credit inquiries or transactions occur. Checking your credit report for errors or fraud can help you prevent identity theft, keep your credit clean, and help you qualify for a bigger mortgage at a better rate. You don't normally see your credit score on a credit report, but if a mortgage broker or loan officer pulls your credit you can usually ask them to tell you what your scores are.