Credit Scoring

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

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

Credit scores only assess the info contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to repay the loan while specifically excluding any other demographic factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. 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 raise it.

For the agencies to calculate a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your credit to calculate 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 Tenby J. Dahman The Dahman Team , we answer questions about Credit reports every day. Give us a call at 3038627760.