Credit Scores

Before lenders decide to give you a loan, they have to know if you are willing and able to repay that loan. To understand whether you can repay, they assess your income and debt ratio. To calculate your willingness to pay back the mortgage loan, they look at your credit score.

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

Your credit score comes from your repayment history. They never consider income, savings, amount of down payment, or personal 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 solely what was relevant to a borrower's likelihood to pay back a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score comes from both the good and the bad in your credit history. Late payments will lower your credit score, but consistently making future payments on time will raise your score.

For the agencies to calculate a credit score, borrowers must have an active credit account with at least six months of payment history. This payment history ensures that there is enough information in your report to generate a score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building a credit history before they apply.

At Executive Lending Group, we answer questions about Credit reports every day. Call us: 4056158543.