Credit Scoring

Before lenders decide to give you a loan, they need to know that you are willing and able to repay that mortgage loan. To assess your ability to repay, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only take into account the information contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to pay without considering other demographic factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score comes from both the good and the bad in your credit history. Late payments lower your score, but consistently making future payments on time will raise 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 enough information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend some time building credit history before they apply for a loan.

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