Your Credit Score: What it means

Before lenders make the decision to give you a loan, they have to know that you're willing and able to repay that loan. To figure out your ability to repay, lenders look at your debt-to-income ratio. In order to calculate your willingness to pay back the mortgage loan, they consult 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.

Credit scores only assess the information contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were invented as it is in the present day. Credit scoring was developed to assess willingness to pay without considering any other personal factors.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scoring. Your score results from both positive and negative items in your credit report. Late payments count against you, but a record of paying on time will raise it.

Your credit 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 history ensures that there is sufficient information in your report to calculate an accurate score. Should you not meet the criteria for getting a score, you may need to establish a credit history before you apply for a mortgage.

Executive Lending Group, LLC can answer your questions about credit reporting. Call us at 8165258000.