About Your Credit Score
Before lenders make the decision to lend you money, they have to know that you're 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 assess your willingness to repay, they use your credit score.
Fair Isaac and Company developed the first FICO score to help lenders assess creditworthines. You can find out more about FICO here.
Your credit score is a direct result of your repayment history. They don't take into account your income, savings, down payment amount, or factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were first invented as it is today. Credit scoring was envisioned as a way to consider only what was relevant to a borrower's likelihood to pay back the lender.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers both positive and negative items in your credit report. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.
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 sufficient information in your report to calculate an accurate score. Some borrowers 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.
At My Mortgage Option, we answer questions about Credit reports every day. Give us a call: 4693224391.