Credit Scores

Before deciding on what terms they will offer you a loan, lenders must find out two things about you: whether you can repay the loan, and if you are willing to pay it back. To assess your ability to repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (very high risk) to 850 (low risk). We've written more on FICO here.

Credit scores only take into account the info contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to repay the loan while specifically excluding any other demographic factors.

Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scoring. Your score considers both positive and negative information in your credit report. Late payments count against you, but a record of paying on time will improve 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 enough information in your report to calculate an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building a credit history before they apply.

Bright Vision Mortgage can answer your questions about credit reporting. Give us a call: (904) 342-3622.

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St. Augustine, FL 32084