Your Credit Score: What it means

Before deciding on what terms they will offer you a mortgage loan, lenders want to find out two things about you: whether you can repay the loan, and your willingness to pay back the loan. To understand whether you can pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.

Your credit score comes from your history of repayment. They don't consider your income, savings, amount of down payment, or personal factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other personal factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is based on the good and the bad in your credit history. Late payments will lower your score, but consistently making future payments on time will improve your score.

Your credit report must have 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 generate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should spend some time building up a credit history before they apply.

24-7 Mortgage Loans can answer your questions about credit reporting. Call us: 5107573659.