Your Credit Score: What it means

Before lenders decide to lend you money, they must know that you are willing and able to pay back that mortgage. To assess your ability to pay back the loan, lenders look at your debt-to-income ratio. To calculate your willingness to repay the loan, they consult your credit score.

The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the info contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's willingness to repay the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score comes from the good and the bad of your credit report. Late payments will lower your score, but consistently making future payments on time will improve 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 a score. Should you not meet the minimum criteria for getting a score, you might need to establish your credit history before you apply for a mortgage loan.

At The Rate Kings Mortgage LLC, we answer questions about Credit reports every day. Call us: 6105723635.