Credit Scores

Before lenders make the decision to give you a loan, they need to know that you're willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they look at 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. You can find out more on FICO here.

Credit scores only take into account the info in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were first invented as it is now. Credit scoring was envisioned as a way to assess willingness to pay while specifically excluding any other personal factors.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score results from both positive and negative information in your credit report. Late payments lower your score, but consistently making future payments on time will raise your score.

To get a credit score, you must have an active credit account with six months of payment history. This history ensures that there is enough information in your credit to build an accurate score. Should you not meet the criteria for getting a credit score, you might need to work on a credit history prior to applying for a mortgage loan.

Southwest Funding #841 can answer questions about credit reports and many others. Call us: (512) 291-6100.