Credit Scores

Before deciding on what terms they will offer you a mortgage loan, lenders want to discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To assess your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to repay the loan, they look at your credit score.

Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. You can find out more about FICO here.

Credit scores only consider the information contained in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is in the present day. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering other irrelevant factors.

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

Your report must 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 payment history ensures that there is sufficient information in your credit to assign an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should spend a little time building up a credit history before they apply.

At Southwest Funding #841
Company NMLS # 303440, we answer questions about Credit reports every day. Give us a call at 5122916100.