About Your Credit Score

Before lenders make the decision to give you a loan, they need to know that you are willing and able to repay that mortgage. To figure out your ability to repay, lenders assess your debt-to-income ratio. To calculate your willingness to repay the mortgage loan, they consult your credit score.

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

Your credit score is a result of your repayment history. They don't consider your income, savings, amount of down payment, or personal factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when FICO scores were first invented as it is now. Credit scoring was invented as a way to consider solely what was relevant to a borrower's willingness to pay back a loan.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scores. Your score is based on the good and the bad of your credit history. Late payments lower your credit score, but consistently making future payments on time will raise 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 sufficient information in your credit to calculate an accurate score. If you don't meet the criteria for getting a credit score, you may need to work on your credit history before you apply for a mortgage loan.

At Bob Rutledge Mortgage, we answer questions about Credit reports every day. Give us a call: 3149139678.