Credit Scoring

Before lenders decide to lend you money, they have to know if you're willing and able to pay back that mortgage loan. To understand whether you can repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

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

Credit scores only take into account the information contained in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed as a way to consider solely what 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 count against your score, but a record of paying on time will raise it.

For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of at least six months. This history ensures that there is sufficient information in your report to generate a score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend some time building up a credit history before they apply.

At The Rate Kings Mortgage LLC, we answer questions about Credit reports every day. Call us at 8009468194.