A Score that Really Matters: The Credit Score
Before lenders make the decision to lend you money, they need to know that you're willing and able to repay that mortgage loan. To understand your ability to repay, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.
Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. You can learn more about FICO here.
Credit scores only take into account the info contained in your credit profile. They do not take into account your income, savings, amount of down payment, or factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess willingness to repay the loan while specifically excluding any other demographic factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is calculated wtih both positive and negative information in your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.
For the agencies to calculate a credit score, borrowers must have an active credit account with at least six months of payment history. This payment history ensures that there is sufficient information in your credit to assign a 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 your questions about credit reporting. Call us: (904) 342-3622.