Did you know that there’s more to getting approved for a home loan than just the standard credit score? In fact, most lenders take a variety of scoring information into account when determining your ability to qualify for a home loan. The more you understand about the process, the better prepared you can be to get the home of your dreams.
Standard Credit Scores
One of the most popular methods of determining approval for a home loan is your FICO score. Based on several benchmark factors, including credit history and access to credit as well as income, you are assigned a number score ranging from 300-850. Your credit score tells prospective lenders what your potential risk factor is and whether you pay your bills late or not at all. The higher the score, the better chances you have of obtaining the best home loan.
The eFunds DebitBureau can also help you when working toward a home loan. By collecting important consumer data from the DebitBureau, the eFunds score consists of specific economic factors, such as reporting how often your credit is checked, how many previous closures or bounced checks you may have and how much debt you currently have. With eFunds, your debit history score takes into account 78 standard data combinations. Using this risk model, many applicants are approved when typical credit scores may indicate potential trouble.
When the three major credit companies join together, you get the VantageScore, which is based on a letter system similar to grades in an academic environment. With a score ranging from 501-990, your VantageScore is a combination of data retrieved from your collective credit scores that reflects the depth of credit in your profile. Again, payment history is decisive, as it reflects more than 30 percent of the VantageScore.
It is never too late to make changes to improve your credit and get the house of your dreams. Every year, you should get an updated copy of your credit report – it is free to do so – to make sure it is reflecting your financial habits in a productive way that helps you build your life as you go. With so many options out there, you are sure to find the right home loan!