About Your Credit Score
Before lenders decide to give you a loan, they must know if you are willing and able to repay that loan. To understand whether you can repay, they assess your income and debt ratio. To calculate your willingness to pay back the loan, they look at your credit score.
The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.
Your credit score comes from your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was invented as a way to take into account only what was relevant to a borrower's willingness to pay back a loan.
Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scoring. Your score is calculated from both the good and the bad in your credit history. Late payments count against your score, but a record of paying on time will improve it.
To get a credit score, borrowers must have an active credit account with six months of payment history. This payment history ensures that there is enough information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend a little time building a credit history before they apply for a loan.
Price Mortgage Group LLC can answer questions about credit reports and many others. Give us a call at 405-513-7700.