Credit Scoring

Before lenders make the decision to give you a loan, they want to know if you're willing and able to repay that mortgage. To assess your ability to repay, lenders look at your debt-to-income ratio. In order to assess your willingness to repay 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. Your FICO score ranges from 350 (high risk) to 850 (low risk). We've written a lot more on FICO here.

Credit scores only assess the information contained in your credit reports. They never consider your income, savings, down payment amount, or factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering any other demographic factors.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score results from both positive and negative items in your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.

To get 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 report to assign an accurate score. Should you not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage loan.

United Capital Mortgage, Inc. can answer your questions about credit reporting. Give us a call at 2147187183.