Your Credit Score: What it means

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

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can find out more on FICO here.

Credit scores only consider the info in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "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 a borrower's willingness to pay without considering other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated from both the good and the bad in your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your report must contain 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 payment history ensures that there is sufficient information in your report to build an accurate 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.

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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