About Your Credit Score

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

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

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

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score reflects both the good and the bad of your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your credit to assign an accurate score. Should you not meet the criteria for getting a credit score, you may need to establish a credit history prior to applying for a mortgage loan.

Tenby J. Dahman can answer questions about credit reports and many others. Call us: 3038627760.