Credit Scoring

Before lenders make the decision to give you a loan, they need to know that you're willing and able to repay that mortgage loan. To understand your ability to 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.

The most widely used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the information contained in your credit reports. They don't consider income, savings, down payment amount, or personal factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to take into account solely what was relevant to a borrower's likelihood to pay back the lender.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative items in your credit report. Late payments lower your credit score, but consistently making future payments on time will raise your score.

Your credit report should 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 payment history ensures that there is enough information in your report to assign an accurate score. Some folks don't have a long enough credit history to get a credit score. They should spend a little time building a credit history before they apply for a loan.

Mutual Security Mortgage can answer your questions about credit reporting. Call us: (303) 931-7879.

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