About Your Credit Score

Before they decide on the terms of your mortgage loan (which they base on their risk), lenders must discover two things about you: whether you can pay back the loan, and if you will pay it back. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company developed the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Your credit score comes from your history of repayment. They never take into account income, savings, amount of down payment, or personal factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when FICO scores were first invented as it is now. Credit scoring was developed to assess willingness to pay while specifically excluding other irrelevant factors.

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

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 payment history ensures that there is enough information in your report to calculate a score. If you don't meet the minimum criteria for getting a credit score, you might need to establish your credit history before you apply for a mortgage loan.

At Bob Rutledge Mortgage, we answer questions about Credit reports every day. Call us at 3149139678.