What is a FICO Score
Our clients often ask us, “What is a FICO score?” A FICO score is another term for credit score. Fair Isaac Company, or FICO, is the organization that calculates people’s credit worthiness. It does this by taking the data given by the three major credit agencies in the U.S., (Equifax, Experian, and TransUnion) and doing what’s called predictive analytic s. Essentially, it’s a series of mathematical calculations that predict how likely a borrower will make their payments on time. This likelihood is expressed in the form of a score, or number.
FICO scores range from 300 to 850. The more creditworthy you are, the higher your FICO score will be; the less creditworthy you are, the lower your FICO score will be.
A FICO score is not like Yelp where people give you a rating from one to five stars. You determine your credit score every time you make a payment on utilities, auto loans, or mortgages. Those companies then report to the credit agencies how often you pay your bills on time.
How to Improve Your FICO Score
There are many ways to improve your FICO score, but we’ll give you a few examples. One obvious way is to always pay your bills on time. Another way is to keep your credit utilization ratio low. If you have a $5,000 credit card, and it’s maxed out every single month, that will hurt your credit score.
Improving your FICO score will not only help you get a home loan, it will also lower the interest rate on your credit cards and make getting a car loan much easier. If you’re getting an education with your GI Bill, you can get better interest rates on your college loans.
No FICO Minimum Requirement
The VA handbook does not have a minimum FICO score requirement and either do we. That being said your credit is still an important factor but we realize that every situation is different. We can give you more details after taking a closer look at your credit report and the things that can improve or hurt your credit score. But what we want you to know is that we here at Low VA Rates do not have a minimum FICO score requirement. We take a look at everything when it comes to our approval process, not just your FICO score. Many of our competitors have what is called overlays and won’t touch a FICO score below 620. Here at Low VA Rates we have done many low FICO score loans. We take into consideration the hardships a military service member has had due to many different factors like deployment or medical bills. We will look at a veteran’s FICO score, but we won’t deny them the loan based on their credit score alone.
If you’ve been turned down by other lenders because you have a low credit score, please give us a call at 855-578-0421 or check out our website militarymortgagecenter.com for more helpful information on VA loans and military related articles. We can help you understand your FICO score better, and we hope to approve you for a VA loan.