About Your Credit Score

Before they decide on the terms of your mortgage loan (which they base on their risk), lenders must know two things about you: whether you can pay back the loan, and how committed you are to pay back the loan. To assess whether you can pay back the loan, they assess your income and debt ratio. To assess your willingness to repay the loan, they look at your credit score.

Fair Isaac and Company built the original FICO score to assess creditworthines. We've written a lot more about FICO here.

Your credit score is a result of your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when these scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering any other irrelevant factors.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all considered in credit scores. Your score is based on 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 improve it.

Your credit report should 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 report to build an accurate score. If you don't meet the minimum criteria for getting a score, you might need to establish your credit history prior to applying for a mortgage loan.

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