A Score that Really Matters: Your Credit Score

Before lenders make the decision to lend you money, they need to know if you are willing and able to pay back that mortgage. To figure out your ability to repay, lenders assess your debt-to-income ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company built the original FICO score to assess creditworthines. We've written a lot more on FICO here.

Your credit score is a result of your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were invented as it is today. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan while specifically excluding other irrelevant factors.

Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score is calculated wtih positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

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

Price Mortgage Group LLC can answer questions about credit reports and many others. Call us: 405-513-7700.