Your Credit Score: What it means

Before lenders make the decision to give you a loan, they need to know if you're willing and able to repay that mortgage loan. To figure out your ability to pay back the loan, they 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 original FICO score to help lenders assess creditworthines. You can find out more about FICO here.

Credit scores only consider the information in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's likelihood to repay the lender.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scoring. Your score comes from 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 report must 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 report to calculate an accurate score. Should you not meet the minimum criteria for getting a score, you might need to work on a credit history before you apply for a mortgage loan.

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