About Your Credit Score

Before deciding on what terms they will offer you a mortgage loan, lenders must know two things about you: whether you can pay back the loan, and your willingness to repay the loan. To figure out your ability to pay back the loan, lenders assess your debt-to-income ratio. In order to calculate your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company calculated the original FICO score to assess creditworthines. We've written a lot more on FICO here.

Your credit score comes from your history of repayment. They do not consider income, savings, down payment amount, or factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider only that which was relevant to a borrower's likelihood to pay back the lender.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on both the good and the bad in your credit history. Late payments count against you, but a record of paying on time will improve it.

Your credit report should have 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 calculate a score. Should you not meet the criteria for getting a credit score, you may need to establish a credit history prior to applying for a mortgage.

At Hometown Financial Services, we answer questions about Credit reports every day. Give us a call: (772) 252-6724.