Credit Scores

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 calculate your willingness to pay back the mortgage loan, they look at your credit score.

Fair Isaac and Company formulated the original FICO score to help lenders assess creditworthines. You can find out more on FICO here.

Credit scores only consider the information contained in your credit reports. They never take into account income, savings, amount of down payment, or personal factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were first invented as it is in the present day. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering any other demographic factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is based on both the good and the bad of your credit history. Late payments count against you, but a consistent record of paying on time will improve it.

For the agencies to calculate a credit score, you must have an active credit account with six months of payment history. This history ensures that there is sufficient information in your credit to assign an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to spend some time building up a credit history before they apply.

Executive Lending Group, LLC can answer your questions about credit reporting. Give us a call: (816) 525-8000.

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