A Score that Really Matters: The Credit Score
Before lenders decide to give you a loan, they want to know that you're willing and able to repay that mortgage loan. To assess your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.
The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.
Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan while specifically excluding other personal factors.
Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scores. Your score is calculated wtih both positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.
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 history ensures that there is enough information in your report to assign an accurate score. If you don't meet the criteria for getting a score, you may need to establish your credit history prior to applying for a mortgage loan.
MidTowne Mortgage can answer your questions about credit reporting. Give us a call: 4787462063.