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Credit score affects your loan prospects - 5. What is your credit score?
To speed the process and cut costs, lenders are relying heavily on automation to underwrite their loans. And to help them judge your credit, they use statistical modeling to come up with a credit score, which is nothing more than a computer-generated number based on the data in your credit report.
The credit score takes into account the same things human underwriters do: 1.The number and frequency of late payments; 2. The number of credit cards you have; 3. Whether you consistently live at your credit limits; 4. Whether you have savings; 5. The frequency with which inquiries are made about your credit.
But the computer is much faster because it can make recommendations in a matter of minutes. And because it is blind to your race, religion, gender, national origin, marital status and income, it's more objective, too. Furthermore, applicants who don't score high enough with the computer aren't rejected. Rather, they are referred to a human who may be able to take "compensating factors" into account.
It's also important to note that besides your credit score, automated underwriting looks at several other credit factors that have a bearing on your loan application. These include: 1. Whether you are buying or refinancing; 2. Whether occupancy is full or part-time; 3.The amount you have for a downpayment; 3. The type of loan and its duration; 4. The type of property; 5. Your employment; 6. How much money you will have in reserve after you close the loan.
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Return to all credit report facts
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