Credit Scoring

Before lenders make the decision to give you a loan, they want to know that you're willing and able to repay that loan. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess how willing you are to repay, they use 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 (very high risk) to 850 (low risk). You can find out more on FICO here.

Credit scores only take into account the info in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when FICO scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering any other demographic factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers 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 a payment history of six months. This payment history ensures that there is enough information in your report to assign an accurate score. Should you not meet the minimum criteria for getting a credit score, you may need to establish a credit history prior to applying for a mortgage loan.

Prime Capital Mortgage Corp can answer your questions about credit reporting. Call us: 248-644-1200.

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