About Your Credit Score
Before lenders make the decision to lend you money, they need to know if you're willing and able to pay back that mortgage. To figure out your ability to repay, lenders assess your debt-to-income ratio. In order to assess your willingness to pay back the mortgage loan, they consult your credit score.
The most widely used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). You can learn more about FICO here.
Your credit score is a direct result of your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess willingness to pay without considering other personal factors.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers both positive and negative information in your credit report. Late payments count against you, but a record of paying on time will improve it.
For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This history ensures that there is enough information in your credit to generate a score. Some folks don't have a long enough credit history to get a credit score. They should build up credit history before they apply.
Contemporary Mortgage Services, Inc can answer your questions about credit reporting. Give us a call at 407-834-3377.
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