Your Credit Score: What it means
Before lenders decide to give you a loan, they want to know that you are willing and able to repay that mortgage loan. To figure out your ability to repay, lenders assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.
Your credit score is a direct 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 FICO scores were invented as it is in the present day. Credit scoring was developed to assess willingness to pay without considering other demographic factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad in your credit history. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.
Your 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 calculate an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply.
Price Mortgage Group LLC can answer questions about credit reports and many others. Give us a call at 405-513-7700.