A Score that Really Matters: The Credit Score

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Before lenders make the decision to lend you money, they want to know that you are willing and able to repay that mortgage loan. To assess whether you can repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthiness. We've written more about FICO here.

Your credit score is a direct result of your history of repayment. 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 first invented as it is today. Credit scoring was developed as a way to consider only what was relevant to a borrower's willingness to repay a loan.

Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scoring. Your score considers positive and negative items in your credit report. Late payments count against you, but a record of paying on time will raise it.

Your credit report must 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 credit to generate a score. Should you not meet the minimum criteria for getting a score, you might need to work on a credit history before you apply for a mortgage.

At Executive Lending Group, we answer questions about Credit reports every day. Give us a call: 913-944-4767.