About Your Credit Score

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Before deciding on what terms they will offer you a mortgage loan, lenders need to find out two things about you: whether you can pay back the loan, and how committed you are to pay back the loan. To understand whether you can repay, they look at your income and debt ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company developed the first FICO score to help lenders assess creditworthines. You can learn more on FICO here.

Your credit score comes from your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider solely that which was relevant to a borrower's likelihood to repay a loan.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad of your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

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 history ensures that there is sufficient information in your report to generate 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 Spooner Financial Services, Inc., we answer questions about Credit reports every day. Give us a call at 8088830740.