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Understanding the Importance of FICO scores: The perspective of a Hard Money Lender in Houston

Posted by Jim Emerson

May 25, 2021 1:24:19 PM

With how trending Flip and Fix investments have become, it is no surprise more people want to get in on the opportunity. To get a loan for such investments, one needs to have the eligible FICO score. Many potential investors do not understand just how the FICO score works, how it is obtained, and how it can affect their ability to get a loan. Therefore, AMI Lenders has put all the information you need to know about FICO scores in this blog. 


What is a FICO Score? 

FICO score is the three-digit number that is derived from the information in your credit reports. This score lets lenders know whether you will be able to repay the loans or not. Therefore, FICO scores are the deciding factor on how much you can borrow, in how many months you must repay the loan, and how much interest you will pay. 


Lenders look at your FICO scores when you apply for a loan, as it is usually the fastest way to determine whether you are eligible for a loan or not. The score includes how long you have had credit for, how much credit you have, how much of the credit available is being used, and whether you have paid the debt on time. 


Apart from making it easier for lenders to make decisions about lending you money, the FICO score helps you get quick access to credit when you need it. You can impact your score positively by paying your bills on time, not having too much debt, and making calculated credit choices. 


The FICO score was created thirty years ago by the Fair Isaac Corporation (FICO) to make creditworthiness fair for both lenders and consumers. 


Why is a FICO Score Important? 

Millions of people can have quick access to their credit when they wish to do certain things, such as for education purposes, buy a home, or insurance for medical expenses. Furthermore, many insurance and utility services tend to check a person's FICO score before setting up their terms of services. 


Most lenders look for your FICO score to determine how risky it is to lend you money. Therefore, a good FICO score can make it more probable for lenders to lend you money as it proves that it is less risky for them.


How Can You Obtain Your FICO Score? 

There is a central website set up by three nationwide credit reporting companies, a toll-free telephone number, and a mailing address where you can obtain your free annual report. You can either:

  1. Visit their website
  2. Call 1-877-322-8228
  3. Send the completed Annual Credit Report Request Form to P.O Box 105281, Atlanta, GA 30348-5281


Ensure you do not contact the three nationwide credit reporting companies separately. You can obtain your report from the three credit reporting companies simultaneously or from each of the three one at a time. According to the law, you are allowed to obtain a free copy of the report every 12 months.


A policy in 2020 stated that everyone in the U.S could get six free credit reports every year till 2026 through the Equifax website or by calling 1-866-349-5191. It is an addition to the one free Equifax report you get at


Furthermore, you can also obtain a free credit report if a company takes action against you, such as denying your application for credit, insurance, or employment. You must ask for your report within the first 60 days of receiving notice of the action. Also, you can obtain a free report once a year if you are unemployed and looking for a job but in a 60 days timeframe. You can also get a free report if you are on welfare or if your report is inaccurate due to fraud, including identity theft.


You can contact the following to buy a copy of your report:

Equifax: 1-800-685-111;

Experian: 1-888-397-3742;

 TransUnion: 1-800-916-8800;

What is a Good FICO Score? 


Lenders look for a good FICO score to determine their eligibility for a loan. Different FICO score ranges determine whether the lenders will lend you money or not. Of course, you can improve your score over time. Like we stated before, your FICO score updates constantly. Following are the different score ranges and their rating:

- Below 580

it is considered to be inadequate as it is below the average score of U.S. consumers. It shows the lenders the risk involved when lending you money.

- 580 – 669

This score is considered to be fair. Even though it is still below the average score of U.S. consumers, lenders tend to approve loans with this score.

- 670 – 739

This range is considered to be good, this score is slightly above the average of U.S. consumers, and lenders will grant you the loans on these scores.

- 740 – 799 

This score is considered very good. It is well above the average U.S. consumers and shows the lenders that you are a reliable borrower.

- 800 and above 

This score range is considered to be exceptional and shows the lenders you are a highly trustworthy borrower.


Types of FICO Scores 

There are over a dozen credit score versions that FICO divides into base scores and industry-specific scores. Base scores determine how likely you will repay credit obligations. Industry-specific scores show the odds you will pay a specific loan, such as a mortgage.


Following are the standard FICO score versions and their use:

- Most widely used – FICO score 8

- Credit card decisions – FICO bankcard scores 2, 4, 5, and 8; FICO score 3

- Auto lending – FICO auto scores 2, 4, 5, and 8

- Mortgage lending – FICO scores 2, 4, and 5

- Latest versions (not widely used) – FICO score 9, FICO auto score 9, FICO bankcard score 9, and FICO score 10



Your financial standings need to have a good FICO score. With a good credit score, it becomes easier for you to get loans approved, rent houses, and get better rates on cars.

AMI Lenders are Hard Money Lenders based in Houston that finance Fix and Flip investments. Our pricing depends on the prospect's credit score, which is the FICO score. We do not approve loans if one's FICO score is too low.


AMI Lenders offer the best interest rates when FICO scores are 640 and above. To find out more about Houston's best private mortgage lender, visit our website now.


Visit our website today and fill out an application for a private hard money loan in Houston.

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For over 30 years, AMI Lenders have been providing financing options to individuals in the Houston area. If we aren't able to assist you, we'll be happy to direct you to someone who can. 

Contact us for any questions or apply online! 

Topics: hard money lenders, AMI Lenders, FICO Scores


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