About Your Credit Score

Before lenders decide to give you a loan, they want to know that you are willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Credit scores only assess the information in your credit reports. They do not consider income, savings, amount of down payment, or personal factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were invented as it is in the present day. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering any other demographic factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad in your credit history. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.

Your credit report must contain 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 payment history ensures that there is enough information in your report to generate a score. If you don't meet the minimum criteria for getting a credit score, you may need to work on a credit history before you apply for a mortgage.

Ashok Lakshmanan can answer your questions about credit reporting. Call us: 630-717-3600.


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