Home Lender report Liz Weston: Will a FICO score of 788 give me the best...

Liz Weston: Will a FICO score of 788 give me the best mortgage rate?

6
0

Dear Liz: I have been thinking about buying a house and want to get a good deal on the mortgage. To do this, I worked on getting my credit score high. I only have one credit card and have had it for less than two years. This credit card got my FICO score at 788. I never had a loan. Would you recommend getting a credit builder loan, to try and increase my score and get a better mortgage deal? Or is 788 good enough?

Reply: Mortgage lenders typically use older versions of the FICO scoring formula. The scores you get can be very different from the free scores you can find online, or even the FICO 8 or FICO 9 scores that your bank and credit card companies can show you.

You can get your mortgage credit scores, as well as the FICO scores used for auto loans and credit cards, for $ 19.95 per credit bureau on MyFico.com. (Make sure you click on the tab that says ‘one-off reports’ because otherwise you are signing up for a subscription service.) Make sure you get scores from all three bureaus, as mortgage lenders use the middle of the three. numbers to determine your interest rate. If your scores are 800, 740, and 720, for example, the lender will use 740 to determine your rate and terms.

If the midpoint of your three mortgage scores is 740 or higher, you should get the best deal from a mortgage lender. If not, the MyFico.com report should give you some clues on how to increase it.

Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.


Source link