A Score that Really Matters: The Credit Score
Before lenders make the decision to lend you money, they want to know if you're willing and able to repay that mortgage. To understand whether you can repay, they look at your income and debt ratio. To calculate your willingness to repay the mortgage loan, they consult your credit score.
Fair Isaac and Company formulated the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.
Your credit score is a result of your history of repayment. 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 a borrower's willingness to pay without considering any other demographic factors.
Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scores. Your score comes from the good and the bad of your credit history. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.
To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your report to calculate an accurate score. If you don't meet the minimum criteria for getting a score, you might need to establish your credit history before you apply for a mortgage.
At Prime Capital Mortgage Corp, we answer questions about Credit reports every day. Give us a call at 248-644-1200.
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