About Your Credit Score
Before deciding on what terms they will offer you a loan, lenders want to discover two things about you: whether you can repay the loan, and if you will pay it back. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To calculate your willingness to repay the mortgage loan, they consult your credit score.
Fair Isaac and Company built the original FICO score to assess creditworthines. For details on FICO, read more here.
Your credit score comes from your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed as a way to take into account solely what was relevant to a borrower's likelihood to pay back a loan.
Deliquencies, 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 is calculated wtih positive and negative information in your credit report. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.
For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is sufficient information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to build up a credit history before they apply.
Mutual Security Mortgage can answer your questions about credit reporting. Call us at (303) 931-7879.