About Your Credit Score

Before lenders make the decision to give you a loan, they have to know if you're willing and able to repay that loan. To understand your ability to repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Credit scores only take into account the information contained in your credit reports. They do not consider income, savings, down payment amount, or demographic factors like sex ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were invented as it is now. Credit scoring was invented as a way to consider only that which was relevant to a borrower's willingness to repay the lender.

Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score comes from both the good and the bad of your credit history. Late payments count against you, but a consistent 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 credit to generate a score. Should you not meet the criteria for getting a score, you might need to work on your credit history before you apply for a mortgage loan.

Custom Lending Group can answer questions about credit reports and many others. Call us at (707) 252-2700.