Credit Scores

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 your ability to pay back the loan, lenders look at your debt-to-income ratio. To calculate your willingness to pay back the mortgage loan, they look at your credit score.

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

Credit scores only assess the info contained in your credit profile. They do not take into account your income, savings, down payment amount, or demographic factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed as a way to take into account solely what was relevant to a borrower's likelihood to pay back a loan.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score reflects the good and the bad in your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.

Your report must 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 payment history ensures that there is enough information in your credit to assign a score. Some folks don't have a long enough credit history to get a credit score. They should build up a credit history before they apply.

Price Mortgage Group LLC can answer your questions about credit reporting. Give us a call: 405-513-7700.