About Your Credit Score
Before they decide on the terms of your loan, lenders need to discover two things about you: your ability to repay the loan, and if you will pay it back. To figure out your ability to repay, lenders assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company built the first FICO score to assess creditworthines. You can find out more about FICO here.
Credit scores only take into account the info contained in your credit reports. They do not take into account income, savings, amount of down payment, or personal factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding any other personal factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score considers both positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.
To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your report to generate an accurate 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 up a credit history before they apply for a loan.
Alternative Mortgage Group can answer questions about credit reports and many others. Give us a call: 561-395-4264.