A Score that Really Matters: Your Credit Score

Before lenders decide to lend you money, they want to know if you are willing and able to pay back that mortgage loan. To assess your ability to repay, they look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the information contained in your credit profile. They don't consider income or personal characteristics. 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 while specifically excluding other demographic factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is calculated from both the good and the bad in your credit history. Late payments will lower your credit score, but consistently making future payments on time will improve your score.

Your credit report should contain 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 sufficient information in your credit to generate an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building up credit history before they apply for a loan.

Not Your Average Lender can answer your questions about credit reporting. Call us at 9722039033.