About Your Credit Score

Before lenders make the decision to lend you money, they need to know if you are willing and able to pay back that loan. To assess your ability to pay back the loan, they look at your debt-to-income ratio. To calculate your willingness to pay back the mortgage loan, they consult your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The 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 history of repayment. They don't consider your income, savings, amount of down payment, or factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to repay the lender.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scores. Your score is calculated from the good and the bad in your credit history. Late payments count against you, but a record of paying on time will improve it.

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 report to build a score. Some borrowers 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.

Carter Financial Solutions can answer your questions about credit reporting. Call us at 8668408745.

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Carter Financial Solutions

2291 W. March Ln Suite A100
Stockton, CA 95207