Credit Scoring

Before lenders decide to lend you money, they must know if you are willing and able to pay back that mortgage loan. To assess your ability to pay back the loan, they look at your income and debt ratio. In order to assess your willingness to repay the loan, they look at your credit score.

The most commonly used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can find out more on FICO here.

Your credit score is a direct result of your history of repayment. They don't consider your income, savings, amount of down payment, or personal factors like gender, ethnicity, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were invented as it is now. Credit scoring was developed to assess willingness to repay the loan without considering other demographic factors.

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

Your 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 sufficient information in your report to build an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply.

1st Credential Mortgage Inc can answer your questions about credit reporting. Call us: (281) 778-0805.

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question