A Score that Really Matters: The Credit Score

	Looking for mortgage advice? We'll be glad to discuss your mortgage needs! Give us a call today at 214.485.2200. Want to get started? Apply Online Now.

Before lenders make the decision to lend you money, they want to know that you are willing and able to repay that mortgage loan. To understand your ability to pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to repay the mortgage loan, they consult your credit score.

The most widely used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can learn more about FICO here.

Credit scores only consider the info in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "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 without considering other demographic factors.

Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scoring. Your score is calculated wtih both positive and negative information in your credit report. Late payments count against your score, 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 history ensures that there is enough information in your credit to build an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to build up a credit history before they apply for a loan.

TMO can answer your questions about credit reporting. Call us at 214.485.2200.