Credit Scoring

Before lenders make the decision to give you a loan, they need to know if you are willing and able to pay back that loan. To assess your ability to repay, they look at your debt-to-income ratio. To calculate your willingness to pay back the mortgage loan, they look at your credit score.

Fair Isaac and Company developed the original FICO score to assess creditworthines. You can find out more about FICO here.

Credit scores only consider the info in your credit profile. 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 consider solely what was relevant to a borrower's likelihood to pay back a loan.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score results from both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is sufficient information in your report to calculate an accurate score. Should you not meet the minimum criteria for getting a credit score, you might need to work on your credit history before you apply for a mortgage.

Greystone Loans, Inc. can answer questions about credit reports and many others. Give us a call: 9094671090.