About Your Credit Score

Before they decide on the terms of your loan (which they base on their risk), lenders must find out 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. In order to calculate your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. You can find out more on FICO here.

Credit scores only consider the info in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were first invented as it is today. Credit scoring was developed to assess willingness to pay without considering other personal factors.

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

Your credit 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 payment history ensures that there is enough information in your report to generate an accurate score. If you don't meet the criteria for getting a score, you might need to work on your credit history prior to applying for a mortgage loan.

At Omni Mortgage Corp., we answer questions about Credit reports every day. Give us a call at 7184417000.