Your Credit Score: What it means

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

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

Credit scores only consider the information in your credit profile. They never take into account income, savings, down payment amount, or personal factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to repay a loan.

Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all considered in credit scores. Your score is calculated wtih positive and negative items in your credit report. Late payments lower your score, but consistently making future payments on time will raise your score.

Your credit 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 history ensures that there is sufficient information in your credit to assign an accurate score. Should you not meet the minimum criteria for getting a score, you may need to establish your credit history before you apply for a mortgage.

Bob Rutledge Mortgage can answer your questions about credit reporting. Give us a call: 3149139678.