A Score that Really Matters: Your Credit Score

Before lenders decide to give you a loan, they have to know that you're willing and able to pay back that loan. To assess whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company developed the original FICO score to help lenders assess creditworthines. We've written more on FICO here.

Credit scores only take into account the information contained in your credit profile. They do not take into account your income, savings, amount of down payment, or demographic factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were invented as it is today. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding other personal factors.

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

For the agencies to calculate a credit score, you must have an active credit account with six months of payment history. This history ensures that there is sufficient information in your credit to calculate an accurate score. If you don't meet the criteria for getting a credit score, you might need to establish a credit history before you apply for a mortgage loan.

At MortgageZ LLC, we answer questions about Credit reports every day. Give us a call at 8557558700.