About Your Credit Score

Before they decide on the terms of your mortgage loan, lenders must discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To assess whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company formulated the original FICO score to help lenders assess creditworthines. You can learn more on FICO here.

Credit scores only assess the info contained in your credit profile. They don't consider income, savings, amount of down payment, or demographic factors like gender, race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.

For the agencies to calculate a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your report to build a score. Some borrowers don't have a long enough credit history to get a credit score. They should build up credit history before they apply for a loan.

Affinity Mortgage Brokers can answer questions about credit reports and many others. Call us at 719-425-2226.


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