Your Credit Score: What it means
Before lenders make the decision to lend you money, they need to know that you're willing and able to pay back that loan. To assess your ability to repay, lenders look at your debt-to-income 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. For details on FICO, read more here.
Your credit score comes from your repayment history. They never consider your income, savings, amount of down payment, or factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to pay while specifically excluding other personal factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on both the good and the bad in your credit history. Late payments lower your score, but consistently making future payments on time will raise your score.
Your credit report should 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 report to build an accurate score. If you don't meet the criteria for getting a credit score, you might need to establish a credit history prior to applying for a mortgage.
The Rate Kings Mortgage LLC can answer questions about credit reports and many others. Give us a call at (610) 572-3635.