Your Credit Score: What it means
Before lenders decide to give you a loan, they need to know that you're willing and able to repay that loan. To understand your ability to repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company calculated the first FICO score to assess creditworthines. For details on FICO, read more here.
Credit scores only assess the information in your credit reports. They do not consider your income, savings, amount of down payment, or factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when FICO scores were first invented as it is today. Credit scoring was developed as a way to consider solely that which was relevant to a borrower's willingness to pay back the lender.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative items in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.
To get a credit score, borrowers must have an active credit account with six months of payment history. This history ensures that there is enough information in your report to generate an accurate score. Some folks 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.
AmeriBest Mortgage can answer questions about credit reports and many others. Give us a call: (321) 777-7277.