About Your Credit Score

Before deciding on what terms they will offer you a loan (which they base on their risk), lenders must discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To assess your ability to pay back the loan, they look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company formulated the original FICO score to assess creditworthines. We've written more on FICO here.

Credit scores only take into account the info in your credit profile. They do not consider your income, savings, amount of down payment, or factors like sex race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering other demographic factors.

Your current debt load, 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 count against you, but a record of paying on time will improve it.

For the agencies to calculate a credit score, borrowers must have an active credit account with six months of payment history. This payment history ensures that there is enough information in your report to generate an accurate score. Should you not meet the criteria for getting a credit score, you may need to work on a credit history before you apply for a mortgage loan.

1st Credential Mortgage Inc can answer your questions about credit reporting. Give us a call at (281) 778-0805.