A Score that Really Matters: Your Credit Score
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Before lenders make the decision to give you a loan, they need to know that you are willing and able to pay back that loan. To understand your ability to repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.
The most widely used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can learn more on FICO here.
Credit scores only assess the information in your credit profile. They don't take into account income, savings, down payment amount, or factors like sex race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were invented as it is in the present day. Credit scoring was envisioned as a way to take into account solely that which was relevant to a borrower's likelihood to pay back a loan.
Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score is based on the good and the bad in your credit history. Late payments count against you, but a consistent record of paying on time will improve it.
Your 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 history ensures that there is sufficient information in your credit to build an accurate score. Should you not meet the criteria for getting a score, you might need to work on a credit history before you apply for a mortgage loan.
At Financial One Mortgage™, we answer questions about Credit reports every day. Call us: (214) 490-7570.
t of new credit -- credit scores requested.
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 ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.