Understanding your credit - Getting your score higher for better rates and programs.
What the heck is credit? What is a FICO Score? Why does everything in our world revolve around credit scores, credit rating, FICO Scores etc? Lets start at the basics, what is credit? Well, credit is defined this way, "The ability of a customer, to obtain goods or services before payment, based on the trust, that payment will be made in the future." I think we all "grasp that concept" the more times you borrow, and always pay back, on time or early, gives you a better credit history, thus a better Credit Score. Now, the FICO Score, what lenders refer to is the same as the "Credit Score" just their fancy term for it.
FICO means, a persons credit score, calculated with software from the Fair Issac Corporation. I know, still don't have a clue what that is supposed to mean either. But, its the definition, so now you know.
According to Wikipedia, credit is defined as: Credit scores in the United States are numbers that represent the creditworthiness of a person, the likelihood that person will pay their debts. Lenders, such as banks and credit card companies, use credit scores to evaluate the risk of lending money to consumers.
So what are the general requirements for loans? It varies, of course, depending on the loan you are talking about. FHA and VA Loans require a minimum of 600 and conventional loan products require a minimum of 620. So what is considered good credit? Well, that depends on who you talk too, but the general consensus is 640 is a good score, 700+ is really good, if you're one of those in the 800 plus range, you're, in my opinion, walking on water.
The Real Estate Guy™
"Equal Housing Opportunity"
Brokered by eXp Realty Arizona