About Your Credit Score
Before lenders make the decision to lend you money, they need to know if you're willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, they look at your debt-to-income ratio. To assess your willingness to pay back the mortgage loan, they look at your credit score.
Fair Isaac and Company calculated the original FICO score to assess creditworthines. We've written a lot more on FICO here.
Your credit score comes from your repayment history. They never consider income, savings, down payment amount, or factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's willingness to repay a loan.
Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scoring. Your score is calculated wtih both positive and negative information in your credit report. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.
Your 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 report to assign an accurate score. If you don't meet the criteria for getting a score, you might need to establish a credit history before you apply for a mortgage loan.
AmeriBest Mortgage can answer questions about credit reports and many others. Give us a call at (321) 777-7277.