Credit Scores

Before lenders make the decision to lend you money, they must know if you're willing and able to repay that mortgage loan. To assess your ability to pay back the loan, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

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

Your credit score is a result of your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is today. Credit scoring was developed to assess a borrower's willingness to pay without considering any other personal factors.

Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative items in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

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

1st Credential Mortgage Inc can answer questions about credit reports and many others. Call us: 2817780805.