About Your Credit Score
Before lenders decide to lend you money, they must know that you're willing and able to pay back that mortgage. To understand your ability to repay, they look at your income and debt ratio. In order to assess your willingness to repay the mortgage loan, they consult your credit score.
The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your 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 repayment history. They don't consider your income, savings, amount of down payment, or personal factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to pay while specifically excluding other irrelevant factors.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score comes from both the good and the bad of your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.
To get a credit score, borrowers must have an active credit account with a payment history of at least six months. This history ensures that there is sufficient information in your credit to generate an accurate score. If you don't meet the criteria for getting a score, you may need to work on your credit history before you apply for a mortgage loan.
At Mutual Security Mortgage, we answer questions about Credit reports every day. Call us at (303) 931-7879.