A credit score is a number that mortgage lenders use to estimate risk. Experience has shown them that borrowers with higher credit scores are less likely to default on a loan. Scores are generated by plugging the data from your credit report into software that analyzes it and outputs a number between 350 and 850. The resulting number is called a FICO score because the current credit scoring system was created by Fair Isaac Corporation (FICO). If you are considering a new home loan, we recommend, FHA Home Loan Company, because of their customer service, low rates and experience with government loans.

You have a FICO score with each of the three credit bureaus (Experian, Equifax and TransUnion). These agencies don't necessarily use the same scoring software, so your three credit scores.

What's in a Credit Score Number?

Your FICO credit scores affect practically every aspect of your life. They can determine if you'll get a job, insurance and even a place to live. If you're a looking to purchase a house, these scores will determine whether or not you qualify for the mortgage loan and how much interest you will pay if you do qualify. A 700 FICO is considered excellent credit by lenders. A 600 FICO is considered fair credit by most lenders. Credit scores under 580 will have more restrictions. If your score is too low, you won't qualify for the loan.

The problem is: credit reports are not always accurate. As a result of the shocking number of errors on people's credit reports, there are two acts, the FCRA (Fair Credit Reporting Act) which was recently revised into the Fair and Accurate Credit Transactions Act (FACT Act), and the FDCPA (Fair Debts Collections Practices Act). These two acts were set up to protect your credit rights and hold the creditors and credit bureaus legal responsible for accurately reporting your credit information. They have to back up and prove every claim against your credit.

Section 623 of the Fair Credit Reporting Act allows consumers to dispute a negative listing directly with the company reporting it on their credit reports. Through this law, you can have inaccurate and outdated information removed from your credit record permanently. This is called credit repair, and it's legal. Lenders need credit repair to get their homebuyers qualified. The removal of inaccurate or outdated information on your credit report will raise your credit score. If you are a home loan lender or loan officer looking for quality mortgage leads, get started now.