About Your Credit Score
Before lenders decide to give you a loan, they must know if you are willing and able to pay back that mortgage loan. To understand your ability to pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use 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 consider the information in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when these scores were invented as it is in the present day. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding other personal factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative items 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 at least six months of payment history. This history ensures that there is enough information in your credit to calculate a score. If you don't meet the minimum criteria for getting a credit score, you may need to work on your credit history prior to applying for a mortgage loan.
Washingtonian Mortgage, LLC can answer your questions about credit reporting. Give us a call: 410-451-2755.