Credit Scoring

	Are you looking for a new mortgage loan? Mike will be glad to discuss our many mortgage solutions! Call him at 708-647-5246. Want to get started? Apply Online Now.

Before lenders make the decision to give you a loan, they must know that you are willing and able to repay that mortgage. To assess your ability to repay, lenders assess your debt-to-income ratio. In order to calculate your willingness to pay back the loan, they look at your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthiness. We've written a lot more on FICO here.

Your credit score comes from your history of repayment. They don't consider income, savings, amount of down payment, or demographic factors like sex ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is today. Credit scoring was developed to assess willingness to repay the loan while specifically excluding any other demographic factors.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scores. Your score comes from the good and the bad in your credit report. Late payments count against you, but a record of paying on time will improve it.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is enough information in your credit to assign a score. Some borrowers don't have a long enough credit history to get a credit score. They should build up credit history before they apply for a loan.

Mike Owens can answer questions about credit reports and many others. Call him: 708-647-5246.