About Your Credit Score

Before they decide on the terms of your mortgage loan (which they base on their risk), lenders need to know two things about you: your ability to pay back the loan, and how committed you are to repay the loan. To understand your ability to repay, they look at your income and debt ratio. In order to assess your willingness to pay back the mortgage loan, they consult your credit score.

Fair Isaac and Company built the first FICO score to assess creditworthines. You can find out more about FICO here.

Your credit score is a result of your history of repayment. They never consider your income, savings, amount of down payment, or demographic factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering any other irrelevant factors.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score reflects the good and the bad in your credit history. Late payments count against your score, but a record of paying on time will improve it.

Your credit report must have at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This history ensures that there is enough information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply for a loan.

Norma Moreno-Squier can answer your questions about credit reporting. Call us at 6023326989.