A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a Chico borrower’s credit history into a single number.
Credit scores analyze numerous factors such as:
- Late payments
- The amount of time credit has been established
- The amount of credit used versus the amount of credit available
- Length of time at present residence
- Negative credit information such as bankruptcies, charge-offs, collections, etc.
What is important to note when buying a Chico home is that your credit score can dictate the loan amount you qualify for, the interest rate you will pay as a home buyer, and whether you qualify for a loan at all. One fact that those buying a Chico home fail to understand is that when you are buying a Chico home and are in escrow, you should never go out and buy anything on credit until the deal closes. This may cause grief in buying a Chico home.
A common mistake by first time Chico home buyers is buying furniture and other household items on credit after buying their Chico home, and while they are buying those items on credit, their credit score is going down. When the credit score goes down, the loan they are trying to get just changed the qualifying score. Now those buying a Chico home cannot close the deal because they no longer have a credit score good enough to qualify. Now the Chico home buyer has brand new furniture on order and no place to put it because they no longer have a loan. Word from the wise… wait to buy all your Chico household items on credit until your Chico Realtor gives you the keys.