Your Credit Score: What it means

Before they decide on the terms of your loan (which they base on their risk), lenders need to find out two things about you: whether you can pay back the loan, and your willingness to repay the loan. To assess your ability to pay back the loan, 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 developed the first FICO score to assess creditworthines. For details on FICO, read more here.

Your credit score comes from your history of repayment. They don't consider your income, savings, down payment amount, or demographic factors like sex ethnicity, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is today. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's willingness to pay back the lender.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scoring. Your score results from positive and negative items in your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your report to generate a score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building up a credit history before they apply.

Bright Vision Mortgage can answer questions about credit reports and many others. Call us at 9043423622.