About Your Credit Score

Before they decide on the terms of your loan (which they base on their risk), lenders want to discover two things about you: your ability to repay the loan, and if you will pay it back. To understand your ability to pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

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

Credit scores only take into account the info contained in your credit profile. They don't take into account your income, savings, down payment amount, or demographic factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. 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.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score reflects the good and the bad of 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.

Your credit 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 payment history ensures that there is sufficient information in your report to generate an accurate score. Some people 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.

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