Credit Scoring

Before they decide on the terms of your loan (which they base on their risk), lenders want to know two things about you: your ability to pay back the loan, and if you are willing to pay it back. To understand whether you can repay, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.

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

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to consider solely what was relevant to a borrower's willingness to pay back the lender.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative items in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.

To get a credit score, borrowers must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your credit to calculate a score. If you don't meet the criteria for getting a credit score, you may need to establish a credit history prior to applying for a mortgage loan.

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