A Score that Really Matters: The Credit Score
Before lenders make the decision to give you a loan, they need to know if you are willing and able to pay back that mortgage. To assess your ability to repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.
Fair Isaac and Company developed the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to take into account solely what was relevant to a borrower's willingness to pay back a loan.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad in your credit history. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
To get a credit score, you must have an active credit account with at least six months of payment history. This payment 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 may need to establish your credit history prior to applying for a mortgage.
1st Credential Mortgage Inc can answer your questions about credit reporting. Call us at (281) 778-0805.