Credit Scoring

Before they decide on the terms of your loan, lenders must know two things about you: whether you can pay back the loan, and if you are willing to pay it back. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. You can find out 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 like these. Credit scoring was developed as a way to consider only that which was relevant to a borrower's likelihood to repay a loan.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is calculated from both the good and the bad in your credit history. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your report should contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This history ensures that there is sufficient information in your credit to assign a score. Some folks don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply for a loan.

Omni Mortgage Corp. can answer questions about credit reports and many others. Call us at 718-441-7000.

Basic Pre-Approval

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