A Score that Really Matters: The Credit Score
Before lenders make the decision to lend you money, they need to know that you're willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to pay back the loan, they look at your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Your credit score is a direct result of your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess a borrower's willingness to pay while specifically excluding other demographic factors.
Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments count against you, but a record of paying on time will improve it.
Your report must contain 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 credit to assign an accurate score. If you don't meet the minimum criteria for getting a score, you might need to work on a credit history before you apply for a mortgage loan.
Mutual Security Mortgage can answer questions about credit reports and many others. Give us a call: 3039317879.