A Score that Really Matters: Your Credit Score
Before lenders make the decision to give you a loan, they need to know that you're willing and able to repay that loan. To understand whether you can repay, they assess your income and debt ratio. To assess your willingness to repay the loan, they look at your credit score.
Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Your credit score is a direct result of your history of repayment. They do not consider your 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. "Profiling" was as dirty a word when these scores were first invented as it is in the present day. Credit scoring was developed as a way to take into account solely that which was relevant to a borrower's willingness to pay back the lender.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score results from positive and negative items in your credit report. Late payments count against your score, but a consistent record of paying on time will raise 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 sufficient information in your credit to build a score. Should you not meet the criteria for getting a score, you may need to establish a credit history before you apply for a mortgage.
Liberty Home Mortgage can answer questions about credit reports and many others. Give us a call at 9724662551.