Credit Scoring

Before lenders make the decision to lend you money, they have to know if you're willing and able to pay back that mortgage loan. To assess your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the first FICO score to assess creditworthines. For details on FICO, read more here.

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were first invented as it is now. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's willingness to pay back a loan.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score considers 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 credit report should 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 payment history ensures that there is sufficient information in your report to generate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should spend a little time building up a credit history before they apply for a loan.

At 1st Credential Mortgage Inc, we answer questions about Credit reports every day. Call us: (281) 778-0805.

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