Home Loans 101: What is Credit Scoring?
Learn about credit scoring in home financing.
Credit scoring refers to a number lenders use to help determine the likelihood that a buyer will pay back a loan on time. The scoring method most often used is FICO, and it can range from 300 to 850. The higher your score, the better you look to a lender, making it more likely to get approved for a loan.
Your credit score also affects the mortgage interest rate you are offered. A higher score often means a lower rate. There are loan programs for those with less than ideal credit, making it possible to buy a home at a low rate even while you work on building up your credit.