A Score that Really Matters: The Credit Score

Before lenders decide to lend you money, they must know that you're willing and able to pay back that mortgage. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. In order to calculate your willingness to pay back the loan, they consult your credit score.

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

Your credit score is a result of your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when these scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering any other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative information in your credit report. Late payments lower your credit score, but consistently making future payments on time will improve your score.

Your 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 sufficient information in your report to generate an accurate score. If you don't meet the criteria for getting a score, you may need to establish a credit history before you apply for a mortgage.

The Rate Kings Mortgage LLC can answer questions about credit reports and many others. Call us at 6105723635.