Your Credit Score: What it means

Before lenders make the decision to lend you money, they want to know if you are willing and able to pay back that mortgage loan. To assess your ability to pay back the loan, they look at your debt-to-income ratio. In order to assess your willingness to pay back the mortgage loan, they look at your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can find out more on FICO here.

Credit scores only consider the info contained in your credit reports. They never consider your income, savings, down payment amount, or factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to pay without considering other personal factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative items in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.

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 sufficient information in your report to assign a score. If you don't meet the minimum criteria for getting a credit score, you may need to establish your credit history before you apply for a mortgage loan.

Bright Vision Mortgage can answer your questions about credit reporting. Give us a call at 9043423622.