Credit Scores

Before lenders decide to give you a loan, they must know that you're willing and able to repay that loan. To assess your ability to repay, lenders assess your debt-to-income ratio. To calculate your willingness to pay back the loan, they look at your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). You can find out more about FICO here.

Credit scores only assess the info in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when FICO scores were first invented as it is in the present day. Credit scoring was developed as a way to take into account only that which was relevant to a borrower's likelihood to pay back the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative items in your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your credit report must have 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 enough information in your report to generate a score. Some people don't have a long enough credit history to get a credit score. They should spend some time building up a credit history before they apply for a loan.

At Bright Vision Mortgage, we answer questions about Credit reports every day. Call us at (904) 342-3622.

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