Your Credit Score: What it means
Before lenders make the decision to give you a loan, they want to know that you are willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they assess your income and debt ratio. To calculate your willingness to repay the mortgage loan, they consult your credit score.
Fair Isaac and Company developed the first 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, amount of down payment, or factors like sex race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering any other demographic 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 considers both positive and negative items in your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.
For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of at least six months. This history ensures that there is enough information in your credit to build a score. Some people don't have a long enough credit history to get a credit score. They should build up credit history before they apply for a loan.
First Southeast Mortgage Corporation can answer questions about credit reports and many others. Call us at 954.920.9799.