There is some very powerful proof of the direct correlation between these numbers and the risks involved. For example, based on FHLMC (Freddie Mac) 1994 loan purchases with repayment performance measured through April of 1996:
Loans with FICO's of 661or greater had less than 1% foreclosures.
Loans with FICO's of 620 to 660 had a foreclosure rate of just over 2%
The clearest illustration of the value of these scores is the fact that loans with FICO's of 619 or less had over 8% foreclosure rate.
So this isn't to say that if you have a low FICO you can't get a loan. In financing a home, you will just pay a bit more for it because there is approximately an 8% chance that you will go into foreclosure. In fact, if you do discover you have a low FICO, you are in esteemed company. Two years ago, Federal Reserve Governor Lawrence Lindsey was denied a Toys R Us credit card for a low FICO.
Contact: <!-- <img src="obr/cervena.gif" width="560" height="0" border="0" alt=""> -->
| Agency: | Century 21 Ludecke Realty |  |
| 20 E. Foothill Blvd. #105 , Arcadia, CA 91006 | ||
| Name: | John Vostenak | |
| Phone: | 1-626-674-1330 | |
| e-mail: | john@csplanet.com | |
| web: | http://www.johnvostenak.com/ | |
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