Credit Scoring

Before lenders decide to lend you money, they want to know if you're willing and able to repay that mortgage loan. To assess your ability to pay back the loan, they assess your debt-to-income ratio. To assess your willingness to repay the loan, they consult your credit score.

The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). We've written more about FICO here.

Credit scores only assess the information contained in your credit profile. They do not take into account your income, savings, down payment amount, or factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was invented as a way to take into account solely that which was relevant to a borrower's likelihood to pay back a loan.

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

Your credit report should have 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 a score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend some time building a credit history before they apply for a loan.

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

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Omni Mortgage Corp.

118-18 101st Avenue
Richmond Hill, NY 11419