Credit Scores

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

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (very high risk) to 850 (low risk). We've written a lot more on FICO here.

Your credit score is a result of your repayment history. They don't consider your income, savings, down payment amount, or factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to take into account only that which was relevant to a borrower's likelihood to repay the lender.

Past delinquencies, 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 results from both positive and negative items in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.

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 credit to generate a score. If you don't meet the criteria for getting a credit score, you might need to establish a credit history before you apply for a mortgage loan.

At Affinity Mortgage Brokers, we answer questions about Credit reports every day. Call us at 719-425-2226.


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