A Score that Really Matters: The Credit Score

Before lenders decide to give you a loan, they have to know if you are willing and able to repay that mortgage. To assess your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

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

Credit scores only take into account the information in your credit profile. They never take into account income, savings, amount of down payment, or factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is today. Credit scoring was developed as a way to take into account only that which was relevant to a borrower's likelihood to repay the lender.

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

To get a credit score, you must have an active credit account with at least six months of payment history. This payment history ensures that there is enough information in your report to calculate an accurate score. If you don't meet the criteria for getting a score, you might need to work on your credit history before you apply for a mortgage loan.

At PREMIERE MORTGAGE SERVICES INC., we answer questions about Credit reports every day. Give us a call: 978-422-2311.

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