The FICO score you buy when checking your credit may be different from the one lenders look at when you apply for a loan. It begs the question: Is it even worth the money? The Consumer Financial Protection Bureau is currently examining the differences between these scores, and their findings may result in some new rules for the industry.
Credit reports are an indicator of how well you pay your debts. So it only makes sense that they should include rent payments. In reality, however, this has not been the case. But that may be starting to change. Experian recently announced they will add this category to some consumer credit reports. We encourage this and hope the other reporting agencies will follow suit.
The average credit score in the United States is somewhere between 670 and 690. Borrowers with scores in this range would likely qualify for a mortgage loan, if they had a decent debt-to-income ratio. But they wouldn’t qualify for the lowest rates that are available today. That’s a different ‘bracket’ entirely.
It’s the end of the year, and that means it is time for our annual review of credit score requirements (as they relate to mortgages and home buying). The million-dollar question is: What will lenders consider to be a ‘good’ credit score in 2011, and how does that affect me during the application and review process?