About Your Credit Score

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

The most commonly used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (high risk) to 850 (low risk). You can find out more about FICO here.

Your credit score is a direct result of your history of repayment. They never take into account your income, savings, amount of down payment, or personal factors like sex ethnicity, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's willingness to repay a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments will lower your credit score, but consistently making future payments on time will raise your score.

Your report should 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 report to generate an accurate score. Some people 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 for a loan.

Bob Rutledge Mortgage can answer questions about credit reports and many others. Give us a call: 3149139678.