About Your Credit Score

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

The most commonly used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (high risk) to 850 (low risk). We've written a lot more about FICO here.

Credit scores only consider the info in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to take into account solely that which was relevant to a borrower's likelihood to repay the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score reflects the good and the bad in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

Your credit 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 build an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should build up a credit history before they apply for a 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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