CREDIT
SCORES ARE
NUMERICAL VALUES THAT RANK INDIVIDUALS ACCORDING TO THEIR CREDIT
HISTORY AT A GIVEN POINT IN TIME. YOUR CREDIT SCORE IS BASED
ON YOUR PAST PAYMENT HISTORY, THE AMOUNT OF CREDIT YOU HAVE OUTSTANDING,
THE AMOUNT OF CREDIT YOU STILL HAVE AVAILABLE AND OTHER FACTORS.
CREDIT SCORES ARE USED IN DETERMINING THE PRICE OF A LOAN BECAUSE
THEY ARE BELIEVED TO BE GOOD PREDICTORS OF A BORROWER'S ABILITY
AND WILLINGNESS TO REPAY THE LOAN. MILLIONS OF CONSUMERS'
CREDIT BUREAU RECORDS WERE USED TO DEVELOP SCORECARDS, AND ALL OF
THE CONSUMER DATA - NOT JUST NEGATIVE INFORMATION - WAS INCLUDED
TO DEVELOP THE SYSTEM. FICO SCORES RANGE FROM 350 TO
900.
MANY LENDERS USE CREDIT SCORES
TO HELP EVALUATE LOAN APPLICATIONS. HOWEVER, A CREDIT SCORE
IS JUST ONE OF MANY CONSIDERED IN THE UNDERWRITING PROCESS.
LENDERS LOOK AT THE ENTIRE PICTURE. EVEN WHEN A CREDIT SCORE
IS LOW, LENDERS TRY TO FIND OTHER FACTORS THAT COULD OVERCOME THE
NEGATIVE CREDIT ISSUES AND SATISFY THEIR UNDERWRITING CRITERIA.
THE DECISION TO APPROVE OR DENY A LOAN WILL BE MADE BASED ON SOUND,
FLEXIBLE UNDERWRITING GUIDELINES.
THERE ARE MANY OTHER FACTORS
RELATING TO AN INDIVIDUAL BORROWER'S SITUATION THAT MAY ALSO AFFECT
THE PRICE OF A LOAN, OFTEN EVEN MORE SO THAN CREDIT SCORE. THESE
INCLUDE:
- •THE
TYPE OF PROPERTY SECURING THE LOAN;
- •THE
AMOUNT OF THE BORROWER'S EQUITY IN THE PROPERTY;
- •THE
LENDER'S COSTS TO MAKE THE LOAN; AND
- •THE
TYPE OF LOAN SELECTED.
FOR EXAMPLE, A LOAN
SECURED BY A SINGLE FAMILY RESIDENCE MAY HAVE A LOWER PRICE THAN
A LOAN SECURED BY A DUPLEX BECAUSE DUPLEXES ARE MORE DIFFICULT TO
SELL THAN SINGLE FAMILY HOMES. SIMILARLY, THE PRICE OF A LOAN
WHERE THE BORROWER HAS MADE A 20% DOWN PAYMENT MAY BE LESS THAN
A LOAN WHERE THE BORROWER HAS MADE A 5% DOWN PAYMENT BECAUSE THE
FIRST BORROWER HAS MORE EQUITY IN THE PROPERTY AND, THUS, A GREATER
INCENTIVE TO MAKE THE PAYMENTS ON THE LOAN. PLEASE CALL ONE OF THE
PHONE NUMBERS BELOW TO SPEAK WITH A BRENTWOOD MORTGAGE SPECIALIST
IF YOU HAVE QUESTIONS. |
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