Credit Scoring

Before deciding on what terms they will offer you a loan (which they base on their risk), lenders need to know two things about you: your ability to repay the loan, and how committed you are to pay back the loan. To assess your ability to repay, they look at your income and debt ratio. To assess your willingness to repay the loan, they consult your credit score.

The most commonly used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can find out more on FICO here.

Your credit score is a direct result of your history of repayment. They don't consider income, savings, amount of down payment, or factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering other irrelevant factors.

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

Your credit report should contain 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 report to generate a score. Some people don't have a long enough credit history to get a credit score. They should spend a little time building up a credit history before they apply for a loan.

Executive Lending Group can answer your questions about credit reporting. Give us a call: 4056158543.


Executive Lending Group

A Division of 1st Capital Mortgage LLC

2401 Tee Circle, STE 102B
Norman, OK 73069