📊 What Is a FICO Score?

A FICO Score is a type of credit score created by the Fair Isaac Corporation and used by most mortgage lenders to evaluate a borrower’s creditworthiness. FICO scores range from 300 to 850 and are based on factors such as payment history, credit utilization, length of credit history, new credit, and credit mix.

How a FICO Score Works

Mortgage lenders rely heavily on FICO scores because they provide a standardized assessment of how risky a borrower may be. While there are many credit scoring models, FICO is the dominant one used in mortgage underwriting, including FHA, VA, USDA, and conventional loans.

  • 300–850 range — higher scores indicate lower credit risk.
  • Payment history — the most important factor, showing whether bills are paid on time.
  • Credit utilization — how much of the available credit the borrower uses.
  • Length of credit history — longer histories improve the score.
  • New credit inquiries — too many may lower the score temporarily.
  • Credit mix — a combination of installment and revolving credit helps.

Mortgage lenders often pull multiple FICO versions from all three bureaus (Experian, Equifax, TransUnion) and use the middle score when qualifying borrowers.

Why FICO Scores Matter in Real Estate

FICO scores are a major factor in mortgage approvals, interest rates, and loan terms.

  • Loan eligibility — lenders require minimum FICO scores for different mortgage programs.
  • Interest rates — higher scores qualify for better rates.
  • Down payment requirements — borrowers with low scores may need larger down payments.
  • Mortgage insurance costs — credit scores affect PMI pricing for conventional loans.

Common FICO score benchmarks:

  • 620+ — minimum for most conventional loans.
  • 580+ — typical minimum for FHA loans.
  • 740+ — considered excellent for securing top-tier rates.

Example of How FICO Scores Affect Mortgages

A borrower applying for a conventional mortgage has the following FICO scores:

  • TransUnion: 710
  • Equifax: 692
  • Experian: 703

The lender uses the 703 middle score to determine loan pricing.

A higher FICO score (e.g., 760) may qualify the borrower for a significantly lower interest rate, reducing monthly payments and total loan costs over 30 years.

Why FICO Scores Matter for FSBO Sellers

FSBO sellers benefit from understanding FICO scores because buyer financing heavily depends on them. A buyer's FICO score can affect closing timelines, loan approval likelihood, and overall purchasing power.

  • Pre-approval letters are influenced by FICO scores.
  • Lower-scoring buyers may face delays or additional underwriting conditions.
  • Higher-scoring buyers are more likely to close smoothly and quickly.
  • FSBO sellers can gauge buyer readiness based on lender-provided FICO-backed pre-approvals.

Listing through Flat Fee MLS on Brokerless helps attract pre-qualified buyers with strong financial profiles.

🔗 Related Resources for Buyers & Sellers

Frequently Asked Questions

Is a FICO score the same as a credit score?
A FICO score is a specific type of credit score created by the Fair Isaac Corporation. Not all credit scores are FICO scores.

What FICO score do you need for a mortgage?
Most conventional loans require 620+, while FHA loans accept scores as low as 580.

Do mortgage lenders use VantageScore?
Rarely. Most lenders still use older FICO models for mortgage underwriting.

Is my free credit score online a FICO score?
Often not. Many free scores use VantageScore models instead of FICO.

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