About Your Credit Score

Before lenders decide to lend you money, they have to know that you're willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. To calculate your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company developed the first FICO score to help lenders assess creditworthines. We've written more about FICO here.

Credit scores only take into account the info in your credit reports. They never consider income, savings, amount of down payment, or factors like sex race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when these scores were first invented as it is today. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan while specifically excluding other personal factors.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scores. Your score considers both positive and negative items 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.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is sufficient information in your report to build an accurate score. Should you not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can answer questions about credit reports and many others. Call us: 2146635355.