Credit Scores

Before deciding on what terms they will offer you a mortgage loan, lenders want to discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To understand your ability to repay, they assess your income and debt ratio. In order to assess your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Credit scores only take into account the information in your credit profile. They do not consider 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 envisioned as a way to take into account only that which was relevant to a borrower's likelihood to pay back the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score comes from both the good and the bad in your credit history. Late payments count against your score, but a consistent record of paying on time will raise it.

For the agencies to calculate a credit score, you must have an active credit account with a payment history of six months. This payment history ensures that there is sufficient information in your credit to calculate a score. Some folks don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply for a loan.

At Milestone Mortgage, Inc. NMLS#136714, we answer questions about Credit reports every day. Call us at 3175959600.