A Score that Really Matters: Your Credit Score

Before lenders decide to lend you money, they have to know that you are willing and able to pay back that loan. To understand your ability to pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company formulated the original FICO score to assess creditworthines. We've written more about FICO here.

Credit scores only assess the info contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to repay the lender.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score considers both positive and negative items in your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.

Your 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 payment history ensures that there is sufficient information in your report to calculate a score. Should you not meet the criteria for getting a credit score, you might need to establish your credit history before you apply for a mortgage.

Not Your Average Lender can answer questions about credit reports and many others. Call us at 9722039033.