About Your Credit Score

Before lenders make the decision to lend you money, they want to know if you're willing and able to pay back that loan. To understand whether you can pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (very high risk) to 850 (low risk). We've written more about FICO here.

Credit scores only assess the info contained in your credit reports. They do not take into account your income, savings, amount of down payment, or demographic factors like gender, race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's willingness to pay back a loan.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scores. Your score considers both positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will improve it.

Your credit report must have 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 report to assign an accurate score. Should you not meet the criteria for getting a score, you might need to establish your credit history before you apply for a mortgage.

1st Credential Mortgage Inc can answer questions about credit reports and many others. Give us a call: (281) 778-0805.

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