Why do you need a FICO score to get a home? The reason why a FICO score is so important in buying a home is its use as a standard in the lending industry. The FICO score has been around for a long time if not the longest and has proven to be one of the most reliable scores on the market. Because of its reliability, it became a standard in mortgages and is used to package and resell mortgages on a secondary market.

As a potential homeowner, it can be said that the better your FICO score, the better change you will get approved. Also, if approved, the FICO score will help determine the interest rate you will pay. This makes having a good or excellent credit score so important.

Before you do apply for a home loan, you should get your FICO score. And to further complicate things, you can also have more than one FICO score. The multiple score are due to fact there are three different credit bureaus tracking your credit. Since the FICO score formula uses information found on your credit and you have three credit reports, you potentially have three FICO score. So it is best to get them all because this will give you time to check for errors and maybe give you the chance to get these errors removed to boost your credit score.

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Generic Credit Scores

Generic credit scores are usually what you think about when you think of your credit score. The credit scoring model uses the same formula each time. The most popular score model is the FICO score calculation. These scores are used by lenders to do the majority lending.

Custom Credit Scores

Custom credit scores are a bit more complicated. These are scores more specific for the lenders conditions. An example would be your auto loan credit score. This is a custom credit score that focuses more on the likelihood that you will pay your auto loan. Your auto loan credit score takes a closer look at your payment history to your auto finance companies and provides a better judgment to the whether or not you will make your car payments.

Obtaining a custom credit score is usually only possible through a lender. They will usually let you know at the time of a loan what your customer credit score is. Now, you might have just checked your score before you applied and got a generic score. Variation between the two is likely. Each scoring model uses a potentially different formula and based on the information used IE. which of your three credit reports, will produce several possible scores.

Navigating this as a consumer is also impossible. The best thing to do is know what is on your credit report and pick a popular credit score to know like the FICO score. By knowing a popular credit score, the better the chances your lender will use this score or at least a version of this score.

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1. Credit Card Companies

This one might be the most obvious, but credit cards are looking at your credit score. They do to review your credit standing and access your risk. They will review your credit score when determining changes in interest rates. If you apply for new credit, your credit score will definitely be checked.

2. Mortgage Lenders

Your credit score is one of the most important factors in a mortgage application. Your FICO score is actually checked. Your FICO score is required because the American government sponsored entities of Freddie Mac and Fannie Mae required it as a standard. Also, FHA required a FICO score.

3. Insurance Companies

Your credit score is also looked at by your insurance companies. They have made a statistical relationship between your credit score and the risk you pose. This is sometimes is seen as a stretch and but it is the standard.

4. Cell Phone companies, Cable Companies, and Utilities

If you are setting service with any of these service-provides you will told your credit will be reviewed. They want to know if you are going to pay your bill or not. If you pose a credit risk they can ask for a security deposit before establishing service.

Who is not looking at your credit score

While there are many uses of your credit score, the score is not necessary for many decisions. An example of this is an employer background check requiring a credit check. Many jobs these days required a credit check before your hiring. If you grant them permission to check your credit, you are allowing the employer to look at your credit score not your credit score.

Wrap up to who is looking at your credit score

As you can see more than just credit card companies are looking at your credit score. These are just four different application of your credit score and there are definitely more. This makes this three digit score one of the most important numbers in your life.

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