About Your Credit Score

Before lenders make the decision to lend you money, they must know that you're willing and able to repay that mortgage. To assess your ability to pay back the loan, they look at your debt-to-income ratio. To assess your willingness to pay back the loan, they consult your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.

Credit scores only consider the information in your credit profile. They don't take into account income, savings, down payment amount, or factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is now. Credit scoring was invented as a way to take into account solely what was relevant to a borrower's willingness to repay the lender.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all calculated into credit scoring. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your credit report should 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 report to assign an accurate score. If you don't meet the minimum criteria for getting a score, you may need to work on your credit history prior to applying for a mortgage loan.

Home Mortgage Lenders, Inc. can answer your questions about credit reporting. Give us a call at 8139881776.

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