About Your Credit Score

Before lenders make the decision to give you a loan, they have to know that you're willing and able to pay back that loan. To assess your ability to pay back the loan, lenders look at your debt-to-income ratio. In order to calculate your willingness to repay the mortgage loan, they look at your credit score.

The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.

Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was invented as a way to consider only what was relevant to a borrower's willingness to repay a loan.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects the good and the bad in your credit history. Late payments count against your score, but a consistent record of paying on time will raise it.

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 enough information in your report to assign an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building up credit history before they apply.

At Pacificwide Lending, we answer questions about Credit reports every day. Give us a call at 9254610500.