A Score that Really Matters: The Credit Score

Before lenders decide to give you a loan, they need to know that you are willing and able to repay that mortgage loan. To understand whether you can pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to pay back the mortgage loan, they look at your credit score.

Fair Isaac and Company developed the original FICO score to help lenders assess creditworthines. You can learn more on FICO here.

Credit scores only consider the info contained in your credit profile. 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 likelihood to repay the lender.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your report should contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This payment history ensures that there is sufficient information in your credit to assign a score. Should you not meet the minimum criteria for getting a score, you may need to establish a credit history before you apply for a mortgage loan.

At Executive Lending Group, LLC, we answer questions about Credit reports every day. Call us: 8165258000.