Credit Scoring

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

Fair Isaac and Company formulated the original FICO score to assess creditworthines. For details on FICO, read more here.

Credit scores only assess the information contained in your credit reports. They never take into account your income, savings, amount of down payment, or demographic factors like gender, race, national origin or marital status. 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 without considering any other personal factors.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scoring. Your score is based on both the good and the bad in your credit history. Late payments count against you, but a consistent record of paying on time will raise it.

Your credit 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 history ensures that there is sufficient information in your credit to generate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should build up a credit history before they apply for a loan.

Bright Vision Mortgage can answer questions about credit reports and many others. Call us: (904) 342-3622.

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