Well, simply put, to the lender, and those guys and gals in the mortgage world, FICO, or Fair Isaac scores as they're affectionately know, can slam your chances of being approved for a loan into the dirt.
The FICO score can decimate you, pummel you, biff you like Raging Bull, smash you like a wrecking ball against the side of a house, blast your saucer, torpedo your hull, sink your ship, and wreck your world.
You better believe it !
Your FICO score is the difference between getting a good financing rate or a bad one. It's the credit reporting system universally used by the mortgage lenders for determining whether or not you'll get a great mortgage rate, a prime mortgage rate, or a sorry one better know as a sub prime rate.
When the bureaus put your credit history down on paper for the financial world review, the FICO scores are calculated based on your past performance with the credit you've been extended.
The higher your score is, the better your chances for obtaining a great loan rate, and the less risk you'll appear to the lender.
The lower your score, the higher the risk you'll appear to the lender and the higher the interest rate you'll pay for the loan, that is if you qualify for one.
I've heard it said that the FICO system has been kind of a problem in recent days for our lenders.
Any thoughts for our lending community ?
The FICO score is a risk assessment of the information in a consumer's credit file.
It is a single, 3-digit number between 300-850tm which ranks consumers according to their credit risk, with the higher scores indicating a lower risk of consumer default.
Each score is accompanied by up to five reason codes indicating the factors that affect the score. The reason codes are shown in descending order of importance. All three of the credit reporting bureaus use the FICO Score in their reporting system. This includes Equifax, Experian and Trans Union.
The Fair Isaac Corporation (NYSE: FIC), 901 Marquette Avenue, Suite 3200, Minneapolis was founded in 1956 on the premise that reliable data will improve decisions in the business world.
U.S. banks and credit card issuers rely on Fair Isaac scores, as do insurers, retailers, telecommunications providers, healthcare organizations and government agencies. FICO® scores are considered the standard measure of credit risk.
What are your experiences with the FICO (Fair Isaac Scores) system ?