About Your Credit Score

Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders must discover two things about you: your ability to pay back the loan, and if you will pay it back. To assess your ability to pay back the loan, they assess your income and debt ratio. To calculate your willingness to pay back the loan, they consult your credit score.

Fair Isaac and Company built the first FICO score to assess creditworthines. You can learn more about FICO here.

Credit scores only consider the info in your credit reports. They do not consider income, savings, down payment amount, or factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess willingness to repay the loan while specifically excluding other personal factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative items in your credit report. Late payments count against your score, but a record of paying on time will raise it.

Your report should 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 payment history ensures that there is enough information in your report to generate an accurate score. Some folks don't have a long enough credit history to get a credit score. They should spend a little time building credit history before they apply for a loan.

Bob Rutledge Mortgage can answer your questions about credit reporting. Call us at 3149139678.