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CHAPTER 6

Credit Scores: What They Are, How They Work, and How to Improve Them

Credit scores, which came into full force in the late 1990s, have changed the way mortgage loan approvals are issued, much the way Automated Underwriting Systems have done. Establishing a credit history is a requirement for obtaining a mortgage, and a credit score is the number assigned to quantify the quality of credit. Understanding how credit scoring and mortgage lending work hand in hand can give you the upper hand when negotiating your loan terms.

6.1 WHAT ARE CREDIT SCORES?

Credit scores are numbers that are derived from a consumer’s credit history. The number ...

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