About Your Credit Score

Before they decide on the terms of your loan, lenders need to discover two things about you: whether you can repay the loan, and if you will pay it back. To assess whether you can pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to pay back the loan, they look at your credit score.

The most commonly used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the info contained 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 invented as a way to take into account solely what was relevant to a borrower's willingness to repay the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score comes from both the good and the bad of your credit history. Late payments count against your score, but a consistent record of paying on time will improve it.

For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your credit to calculate a score. If you don't meet the criteria for getting a score, you may need to work on a credit history prior to applying for a mortgage.

Prime Capital Mortgage Corp can answer questions about credit reports and many others. Give us a call: 248-644-1200.

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