About Your Credit Score

Before lenders decide to give you a loan, they want to know that you are willing and able to repay that mortgage loan. To assess your ability to pay back the loan, lenders look at your debt-to-income ratio. In order to calculate your willingness to repay the loan, they consult your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can learn more about FICO here.

Credit scores only take into account the information in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess willingness to pay while specifically excluding any other personal factors.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all considered in credit scores. Your score comes from both the good and the bad in your credit history. Late payments lower your credit score, but consistently making future payments on time will raise 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 history ensures that there is sufficient information in your report to build an accurate score. Some folks don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply.

At Precision Mortgage, Inc., we answer questions about Credit reports every day. Call us: 206-920-1112.