Credit Scoring

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Before lenders decide to give you a loan, they must know if you're willing and able to pay back that mortgage loan. To understand your ability to repay, they assess your income and debt ratio. In order to assess your willingness to repay the mortgage loan, they consult your credit score.

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

Credit scores only consider the information contained in your credit profile. They don't consider income, savings, amount of down payment, or personal factors like gender, ethnicity, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed to assess willingness to repay the loan without considering any other personal factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated wtih positive and negative information in your credit report. Late payments will lower your credit score, but consistently making future payments on time will raise your score.

Your 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 build an accurate score. Should you not meet the minimum criteria for getting a score, you might need to establish a credit history prior to applying for a mortgage loan.

At Mortgage Makers USA, Inc., we answer questions about Credit reports every day. Give us a call at 561-447-9580.