A Score that Really Matters: Your Credit Score

Before lenders make the decision to give you a loan, they have to know if you're willing and able to repay that mortgage loan. To assess your ability to repay, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

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

Credit scores only take into account 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 developed as a way to consider only what was relevant to a borrower's willingness to repay the lender.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score reflects both the good and the bad in your credit history. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.

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 credit to build an accurate score. Should you not meet the criteria for getting a credit score, you may need to work on your credit history prior to applying for a mortgage loan.

Executive Lending Group, LLC can answer your questions about credit reporting. Call us at (816) 525-8000 & (81.

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