A Score that Really Matters: The Credit Score

Before deciding on what terms they will offer you a loan (which they base on their risk), lenders want to find out two things about you: your ability to repay the loan, and how committed you are to repay the loan. To assess your ability to pay back the loan, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written more about FICO here.

Your credit score is a direct result of your history of repayment. They do not take into account income, savings, down payment amount, or personal factors like gender, ethnicity, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding any other personal factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from the good and the bad in your credit history. Late payments lower your credit 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 a payment history of at least six months. This payment history ensures that there is enough information in your report to build a score. Should you not meet the minimum criteria for getting a score, you might need to work on your credit history prior to applying for a mortgage.

PREMIERE MORTGAGE SERVICES INC. can answer questions about credit reports and many others. Give us a call: 978-422-2311.

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