A Score that Really Matters: Your Credit Score
Before lenders make the decision to lend you money, they want to know if you're willing and able to repay that mortgage. To assess your ability to repay, they assess your income and debt ratio. To assess your willingness to pay back the mortgage loan, they consult your credit score.
Fair Isaac and Company developed the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Your credit score is a result of your repayment history. They don't take into account your income, savings, amount of down payment, or factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to pay without considering other irrelevant factors.
Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score considers both positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will raise 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 enough information in your report to assign a score. Some people 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.
Price Mortgage Group LLC can answer questions about credit reports and many others. Give us a call: 405-513-7700.