Credit Scoring

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

Fair Isaac and Company built the original FICO score to assess creditworthines. You can find out more about FICO here.

Your credit score comes from your repayment history. They never consider your income, savings, down payment amount, or personal factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is today. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering any other irrelevant factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from both the good and the bad of your credit history. Late payments count against your score, but a consistent record of paying on time will raise it.

Your 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 enough information in your credit to calculate a score. Some folks don't have a long enough credit history to get a credit score. They may need to build up a credit history before they apply for a loan.

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