About Your Credit Score
Before lenders decide to lend you money, they have to know if you are willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. In order to assess your willingness to repay the loan, they consult your credit score.
Fair Isaac and Company formulated the first FICO score to 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 developed to assess a borrower's willingness to repay the loan while specifically excluding other demographic factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative items in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.
Your 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 payment history ensures that there is enough information in your credit to generate a score. Some folks 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.
At America's Home Loans, we answer questions about Credit reports every day. Call us: 701.222.0100.