Credit scoring system and how it works If you have applied for a mortgage in the past five years,
you've probably heard of the credit scoring system by now. Perhaps you
were told that your credit scoring was wonderful, or needed work. Or maybe
your mortgage would have been lowered by several points, if you had better
credit scoring.
So, using this logic, the industry movers and shakers decided that if the car buying process was this easy, then home buying should be as well. Credit scoring filters out bad creditors.Although in theory this sounds quite amazing, it's only been recently that this has actually been the reality of the process. This is partially because the credit scoring models have become more refined over the years. And now, almost all mortgages are determined using some sort of credit scoring process.The credit scoring system is used bt most financial professionals.These mortgage brokers usually use some sort of credit reporting agency to get information about someone who has applied for financing, or credit scoring, with them. But what most people don't know is that there are two different kinds of credit reporting agencies whose information determines your credit scoring. The first is the four big credit agencies: Innovax, Equifax, TransUnion and Experian. When a person gets credit, or even applies for credit, this is reported back to these credit agencies, and kept on file indefinitely. Files are updated, usually, on a monthly basis. However, these credit scoring agencies only accept the information as it is given to them; there is no fact checking process to ensure that your credit scoring is accurate.Credit scoring agencies will also get information on a consumer applying for a mortgage using other sources, such as the Department of Motor Vehicles, the Medical Information Board, the FBI, local law enforcement agencies, county records, government records, and the like. The mortgage industry has a repository of their own for information about people they give credit to, which can be accessed in a pinch if required, so that those who are bad credit risks don't get a good credit scoring. |
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Credit scoring system and how it works