Your Credit Score: What it means
Before lenders decide to lend you money, they must know if you're willing and able to repay that mortgage loan. To figure out your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay, they use 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 consider the information contained in your credit profile. They never take into account your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess willingness to pay without considering other demographic factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.
For the agencies to calculate a credit score, borrowers must have an active credit account with six months of payment history. This payment history ensures that there is sufficient information in your credit to calculate an accurate score. If you don't meet the minimum criteria for getting a credit score, you may need to work on a credit history prior to applying for a mortgage.
Bright Vision Mortgage can answer questions about credit reports and many others. Give us a call: (904) 342-3622.