Credit scores are numerical values that rank individual's according to their credit history at a given point in time. Your score is based on your past payment history, the amount of credit you have outstanding, the amount of credit you have available, and other factors. According to Fannie Mae and Freddie Mac, two of the largest purchasers of home loans from lenders, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan. Many lenders use credit scores to help evaluate loan applications. However, a credit score is just one of many factors considered in the underwriting process.
Lenders look at the entire picture.
Even when a credit score is low, lenders try to find other factors that could overcome the negative credit issues and satisfy their underwriting criteria. The decision to approve or deny a loan may be made based on sound, flexible underwriting guidelines. FICO scores use credit bureau information to obtain a score which indicates how likely someone is to make their loan payments on time. FICO scores range from approximately 350 to 900. Similarly, the lower the score the more likely someone is not to make their payments.