About Your Credit Score
Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders want to know two things about you: whether you can pay back the loan, and how committed you are to repay the loan. To understand whether you can pay back the loan, they assess your income and debt ratio. To calculate your willingness to pay back the loan, they look at your credit score.
Fair Isaac and Company formulated the original FICO score to assess creditworthines. We've written a lot more about FICO here.
Credit scores only take into account the info contained in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering other demographic factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will raise it.
For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is sufficient information in your report to build a score. If you don't meet the criteria for getting a score, you may need to establish a credit history before you apply for a mortgage.
Prime Capital Mortgage Corp can answer your questions about credit reporting. Call us: 248-644-1200.
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