Credit Scoring

Before lenders make the decision to give you a loan, they must know if 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.

The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). You can learn more about FICO here.

Your credit score comes from your repayment history. They never consider income, savings, amount of down payment, or demographic factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to pay while specifically excluding other irrelevant factors.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score considers positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will raise it.

For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your report to calculate an accurate score. If you don't meet the minimum criteria for getting a score, you may need to work on a credit history prior to applying for a mortgage loan.

At Bright Vision Mortgage, we answer questions about Credit reports every day. Give us a call: (904) 342-3622.

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