A Score that Really Matters: Your Credit Score

Before lenders decide to give you a loan, they want to know if you're willing and able to repay that loan. To assess your ability to repay, lenders look at your debt-to-income ratio. In order to assess your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company formulated the first FICO score to assess creditworthines. For details on FICO, read more here.

Credit scores only take into account the information contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is now. Credit scoring was envisioned as a way to take into account solely that which was relevant to a borrower's willingness to repay a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated wtih positive and negative items in your credit report. Late payments will lower your score, but consistently making future payments on time will raise your score.

To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your credit to assign an accurate score. Should you not meet the criteria for getting a score, you may need to work on a credit history prior to applying for a mortgage.

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