About Your Credit Score
Before lenders make the decision to lend you money, they want to know that you're willing and able to pay back that mortgage. To assess your ability to pay back the loan, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.
The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). You can find out more on FICO here.
Credit scores only consider the information in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were invented as it is today. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding other personal factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score results from positive and negative information in your credit report. Late payments count against you, but a record of paying on time will improve it.
For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your report to build an accurate score. Some folks don't have a long enough credit history to get a credit score. They should build up credit history before they apply.
Washingtonian Mortgage, LLC can answer questions about credit reports and many others. Call us: 410-451-2755.