Your Credit Score: What it means

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

Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. You can find out more about FICO here.

Credit scores only take into account the info contained in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when these scores were invented as it is today. Credit scoring was envisioned as a way to assess willingness to pay while specifically excluding any other personal factors.

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

Your report should 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 history ensures that there is sufficient information in your credit to build a score. Should you not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

At Tenby J. Dahman The Dahman Team , we answer questions about Credit reports every day. Give us a call: 3038627760.