About Your Credit Score

Before they decide on the terms of your loan (which they base on their risk), lenders need to find out two things about you: whether you can repay the loan, and if you are willing to pay it back. To understand whether you can pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to repay the mortgage loan, they consult 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). You can find out more on FICO here.

Credit scores only assess the info contained in your credit reports. They do not consider income, savings, amount of down payment, or personal factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to repay the lender.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score comes from the good and the bad in your credit history. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your report to build a score. Should you not meet the minimum criteria for getting a credit score, you may need to establish your credit history prior to applying for a mortgage loan.

Mutual Security Mortgage can answer questions about credit reports and many others. Call us: (303) 931-7879.

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