Credit Scoring

Before lenders decide to give you a loan, they must know that you're willing and able to repay that mortgage loan. To understand whether you can repay, they assess your income and debt ratio. In order to assess your willingness to pay back the mortgage loan, they look at your credit score.

Fair Isaac and Company developed the first FICO score to assess creditworthines. We've written a lot more on FICO here.

Your credit score is a result of your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is in the present day. Credit scoring was invented as a way to take into account solely that which was relevant to a borrower's willingness to repay a loan.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scoring. Your score is calculated from the good and the bad of your credit report. Late payments count against you, but a consistent record of paying on time will improve it.

Your credit report must 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 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 your credit history prior to applying for a mortgage.

Omni Mortgage Corp. can answer questions about credit reports and many others. Give us a call: 7184417000.