About Your Credit Score

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Before lenders make the decision to give you a loan, they have to know if you are willing and able to pay back that mortgage loan. To assess your ability to pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company calculated the first FICO score to assess creditworthines. We've written a lot more on FICO here.

Your credit score is a result of your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were invented as it is in the present day. Credit scoring was invented as a way to take into account solely that which was relevant to a borrower's likelihood to pay back the lender.

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

To get a credit score, you must have an active credit account with a payment history of at least six months. This history ensures that there is sufficient information in your report to generate a score. Some borrowers don't have a long enough credit history to get a credit score. They may need to build up a credit history before they apply.

At First Residential Mortgage, we answer questions about Credit reports every day. Give us a call at (831) 459-6073.