About Your Credit Score
Before lenders decide to give you a loan, they need to know that you're willing and able to pay back that loan. To assess whether you can repay, they look at your income and debt ratio. In order to assess your willingness to repay the loan, they look at your credit score.
Fair Isaac and Company built the original FICO score to assess creditworthines. For details on FICO, read more here.
Your credit score comes from your repayment history. They never take into account income, savings, down payment amount, or factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "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 irrelevant factors.
Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scores. Your score results from both positive and negative items in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.
Your report must 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 enough information in your credit to build an accurate score. Should you not meet the minimum criteria for getting a score, you might need to work on your credit history before you apply for a mortgage loan.
Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can answer questions about credit reports and many others. Give us a call: 2146635355.