Your Credit Score: What it means
Before they decide on the terms of your loan, lenders need to discover two things about you: your ability to repay the loan, and if you are willing to pay it back. To assess whether you can pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.
Fair Isaac and Company built the original FICO score to assess creditworthines. You can find out more on FICO here.
Credit scores only assess the information contained in your credit profile. They don't take into account income, savings, down payment amount, or demographic factors like gender, ethnicity, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider only that which was relevant to a borrower's likelihood 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 is based on the good and the bad of your credit report. Late payments count against you, but a consistent record of paying on time will raise it.
To get a credit score, borrowers must have an active credit account with at least six months of payment history. This payment history ensures that there is enough information in your report to assign an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend a little time building up a credit history before they apply for a loan.
Mutual Security Mortgage can answer questions about credit reports and many others. Give us a call at (303) 931-7879.