About Your Credit Score

Before lenders decide to lend you money, they must know that you're willing and able to pay back that mortgage. To assess whether you can repay, they look at your income and debt ratio. In order to calculate your willingness to repay the loan, they look at your credit score.

Fair Isaac and Company developed the original FICO score to assess creditworthines. You can find out more on FICO here.

Credit scores only take into account the info contained in your credit reports. They don't consider income, savings, down payment amount, or demographic factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to pay without considering other demographic factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score reflects the good and the bad 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.

For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is sufficient information in your report to assign a score. If you don't meet the minimum criteria for getting a score, you may need to establish your credit history before you apply for a mortgage.

Pacificwide Lending can answer your questions about credit reporting. Call us at 9254610500.