About Your Credit Score
Before they decide on the terms of your loan (which they base on their risk), lenders want to discover two things about you: whether you can repay the loan, and how committed you are to repay the loan. To understand whether you can repay, they assess your income and debt ratio. To calculate your willingness to pay back the loan, they consult your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.
Credit scores only assess the info contained in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other demographic factors.
Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score is calculated from the good and the bad in your credit history. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.
Your report must 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 payment history ensures that there is sufficient information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to spend some time building up credit history before they apply.
The Rate Kings Mortgage LLC can answer your questions about credit reporting. Give us a call at 6105723635.