Your Credit Score: What it means

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

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

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were invented as it is today. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's willingness to repay the lender.

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

To get a credit score, you must have an active credit account with at least six months of payment history. This payment history ensures that there is enough information in your report to generate a score. Should you not meet the minimum criteria for getting a credit score, you may need to work on your credit history prior to applying for a mortgage.

First Southeast Mortgage Corporation can answer questions about credit reports and many others. Give us a call at 954.920.9799.

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