Before lenders make the decision to lend you money, they must know if you're willing and able to repay that loan. To understand whether you can 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 widely 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). You can find out more on FICO here.
Your credit score is a direct result of your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding any other personal factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated from the good and the bad in your credit report. Late payments count against your score, but a record of paying on time will improve it.
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 sufficient information in your credit to generate a score. If you don't meet the criteria for getting a credit score, you may need to work on a credit history before you apply for a mortgage loan.
Executive Lending Group, LLC can answer questions about credit reports and many others. Give us a call at (816) 525-8000 & (81.
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