About Your Credit Score
Before they decide on the terms of your loan (which they base on their risk), lenders need to find out two things about you: whether you can repay the loan, and your willingness to pay back the loan. To assess whether you can repay, they assess your income and debt ratio. To calculate your willingness to pay back the mortgage loan, they consult your credit score.
Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. You can find out more about FICO here.
Your credit score comes from your repayment history. They don't consider your income, savings, amount of down payment, or personal factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering any other irrelevant factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad of your credit report. Late payments count against you, but a record of paying on time will raise it.
For the agencies to calculate 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 sufficient information in your credit to generate a score. Some people don't have a long enough credit history to get a credit score. They should spend some time building a credit history before they apply.
First Southeast Mortgage Corporation can answer your questions about credit reporting. Call us at 954.920.9799.