Credit Scores Explained

CREDIT SCORES

FICO Score:  FICO is an abbreviation for Fair Issac Corporation and refers to a person’s credit score based on credit history.  Lenders and credit card companies use the number to decide if the person is likely to pay his or her bills.  A credit score is evaluated using information from the three major credit bureaus and is usually between 300 and 850.

“A” Loan or “A” Paper:  a credit rating where the FICO score is 660 or above.  There have been no late mortgage payments within a 12-minth period.  This is the best credit rating to have when entering into a new loan.

“B” Loan or “B” Paper:  FICO scores from 620- 659.  Factors include two 30 day late mortgage payments and two to three 30 day late installment loan payment sin the last 12 months.  No delinquencies over 60 days are allowed.  Should be two to four years since a bankruptcy.  Also referred to as SUB-Prime.

“C” Loan or “C” Paper:  FICO scores typically from 580 to 619.  Factors include three to four 30 day late mortgage payments and four to six 30 day late installment loan payments or two to four 60 day late payments.  Should be one to two years since bankruptcy.  Also referred to as Sub-Prime.

Source:  HUD Glossary. www.hud.gov