A Score that Really Matters: Your Credit Score

Before lenders make the decision to lend you money, they need to know if you are willing and able to repay that loan. To figure out your ability to repay, they assess your debt-to-income ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.

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

Your credit score is a result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering other demographic factors.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scores. Your score considers both positive and negative items in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.

For the agencies to calculate a credit score, you must have an active credit account with at least six months of payment history. This payment history ensures that there is sufficient information in your credit to calculate a score. Some borrowers don't have a long enough credit history to get a credit score. They should build up credit history before they apply for a loan.

At Custom Lending Group, we answer questions about Credit reports every day. Call us: 7072522700.


Custom Lending Group

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