A Score that Really Matters: Your Credit Score

Before they decide on the terms of your loan, lenders want to know two things about you: your ability to pay back the loan, and how committed you are to pay back the loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to assess creditworthines. 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 developed to assess a borrower's willingness to repay the loan while specifically excluding other demographic factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated from the good and the bad of your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

To get a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your credit to assign an accurate score. If you don't meet the criteria for getting a score, you might need to work on your credit history prior to applying for a mortgage.

At Pacificwide Lending, we answer questions about Credit reports every day. Call us: 9254610500.