FICO Score–
Excellent credit is a requirement for obtaining conventional home financing, not a compensating factor, and depending on the amount of down payment, someone with a FICO score of 620 will get the exact same rate as someone with a FICO score of 811.
Unfortunately there is far more inaccurate information out there about credit scoring than there should be, and there have been people in the mortgage industry that have used this to their advantage to provide financing at higher rates than necessary(maybe not a whole lot higher – .125% could be all, but that is generally profit for the loan officer.
For an opposite example, I had a client who had a substantial amount of equity but a mid FICO of 590 – below the FNMA threshold of 620, but FHLMC (Freddie Mac) does not have a minimum credit score requirement. He got the same rate as anyone else that would have had an identical financing scenario other than the FICO score.
1 Comment
May 3, 2007 at 3:05 am
My FICO is good enough, but I still aspire to improve it. It is a well known fact, the higher credit score you have, the more benefits you can get.