About Your Credit Score
Before lenders make the decision to lend you money, they have to know if you are willing and able to repay that mortgage loan. To figure out your ability to repay, lenders look at your debt-to-income ratio. To calculate your willingness to pay back the loan, they look at your credit score.
Fair Isaac and Company developed the first FICO score to assess creditworthines. You can learn more about FICO here.
Credit scores only take into account the info in your credit profile. They don't take into account your income, savings, amount of down payment, or factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was invented as a way to consider only what was relevant to a borrower's willingness to pay back a loan.
Your current debt load, 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 you, but a consistent record of paying on time will improve it.
Your report must have 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 history ensures that there is enough information in your credit to build an accurate score. If you don't meet the minimum criteria for getting a score, you might need to work on your credit history before you apply for a mortgage loan.
At Price Mortgage Group LLC, we answer questions about Credit reports every day. Call us at 405-513-7700.