About Your Credit Score

Before lenders decide to give you a loan, they want to know that you're willing and able to repay that mortgage loan. To understand whether you can pay back the loan, they assess your income and debt ratio. In order to calculate your willingness to pay back the mortgage loan, they consult your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (very high risk) to 850 (low risk). We've written more on FICO here.

Credit scores only assess the info 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 FICO scores were invented as it is in the present day. Credit scoring was developed as a way to consider only that which was relevant to a borrower's likelihood to repay a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score comes from both the good and the bad 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, borrowers must have an active credit account with a payment history of at least six months. This history ensures that there is sufficient information in your credit to build a score. Some people 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 questions about credit reports and many others. Call us: 407-834-3377.

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