Credit Scoring

Before lenders decide to lend you money, they have to know that you are willing and able to pay back that loan. To assess your ability to pay back the loan, lenders assess your debt-to-income ratio. To calculate your willingness to repay the loan, they look at your credit score.

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

Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was invented as a way to take into account solely what was relevant to a borrower's willingness to pay back a loan.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all calculated into credit scoring. Your score reflects the good and the bad in your credit history. Late payments will lower your score, but consistently making future payments on time will improve your score.

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 calculate a score. Some people don't have a long enough credit history to get a credit score. They should spend a little time building credit history before they apply.

AmeriBest Mortgage can answer your questions about credit reporting. Give us a call: 3217777277.