Mortgage FICO Score
Numerous credit score versions exist, including multiple versions of the FICO score. The FICO score used by the mortgage and lending industry uses a different scoring algorithm than the FICO score included on consumer credit card statements and available through consumer monitoring services and credit education websites. Different industries (auto, retail, tenant, insurance) use score algorithms that are unique from the mortgage FICO score.
Payment History (35%)
Delinquencies reported by creditors are the primary indicator of risk.
Amounts Owed or Outstanding Debt Utilization (30%)
Amount of outstanding balances and the proportion of the balances to total credit limits (debt utilization) is another primary credit risk indicator.
Length of Credit History (15%)
Date opened is reported with each tradeline on a credit report. Shorter debt history can correlate to higher risk, but this is only a factor if other negative factors exist.
New Credit (10%)
A high number of inquiries on a borrower’s credit and numerous accounts opened in the last year are potential indicators of higher risk, however, the other data in the report carries greater impact in calculating the score.
Multiple mortgage inquiries count as 1-inquiry if made within a short period of time.
Certain types of inquiries do NOT impact your score including self-pulls, requests made by lenders for pre-approval offers, monitoring inquiries by creditors with whom there is an existing account, & employment credit.
Type of Credit Used (10%)
The presence & prevalence of various types of accounts including mortgages, credit cards, retail accounts, installment loans, auto loans etc., provides a more complete indicator on credit risk as payment patterns can be viewed across different types of accounts.
Click here for a CIS FAQ on Credit Freezes