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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