How to Get Pre-Qualified

Credit History and Scores

Besides employment history, lenders also rely heavily on an applicant's credit history and scores. They order mortgage credit reports from local credit bureaus to obtain this information. Credit bureaus, in turn, gather data from multiple sources, such as retailers, banks, finance companies, mortgage lenders, and various public records. These public sources contain information on every consumer who has used any credit, such as credit cards, car loans, mortgages, personal loans, and charge accounts.

When all this data is combined, your credit score is then calculated by weighing the value of different factors. Generally, the evaluation will be broken down like below:

• 35% - Payment History: shows whether you have a history of paying late or on-time
• 30% - Amount Owed: shows whether you tend to have high balances/max out your credit limit
• 15% - Length of Credit History: shows your years of experience with credit accounts
• 10% - Credit Mix: shows how you manage different types of credit accounts
• 10% - New Credit: shows how "risky" you might be based on how many new credit accounts you've opened recently

When assessing creditworthiness, the most common type of credit score that lenders use is called the "FICO Score." The FICO Score ranges from 400 to 900, with 900 representing the best score. A higher score indicates a lower likelihood of mortgage default, making pre-qualification for a mortgage easier. FICO Scores are highly accurate predictors of future delinquencies.