If you’re seriously thinking about buying a home in the months ahead, you almost certainly know how important your FICO credit score will be in getting a mortgage.
And you probably know the score range you’ll need for the type of loan you want — somewhere in the low- to mid-700s for a conventional mortgage eligible for sale to investors Fannie Mae or Freddie Mac, or a score in the mid- to upper 600s for a Federal Housing Administration insured loan. The actual minimum score for approval also will depend on your debt-to-income ratio, down payment and other factors in your application.
But let’s say you’re like many other would-be buyers — your FICO score isn’t quite where it needs to be. The question then becomes: How do I push my score high enough for a mortgage? You may know the credit missteps that caused your score to be low, but you lack a precise set of steps to move your score up. There are dozens of websites online that can offer you “credit repair” suggestions and scores, but none has access to proprietary FICO-score algorithms. As a result, they’re not reliable when you apply to a lender, who will only be interested in your FICO score, not some credit site’s in-house score.
That’s all about to change. FICO has created a new prescriptive “Score Planner” tool that the company says will allow you to improve your score within a set time period by following a customized, detailed set of steps. Though it’s only in the pilot stage with one of the three national credit bureaus, Experian, FICO officials told me last week that in the months ahead it should become widely available through participating banks, mortgage companies, brokers and others. Tom Quinn, FICO’s vice president of scores, said in an interview that it may be offered “for a fee or free of charge,” depending on the source.
