About Your Credit Score

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Before they decide on the terms of your mortgage loan, lenders must discover two things about you: whether you can repay the loan, and if you are willing to pay it back. To assess your ability to pay back the loan, they look at your income and debt ratio. To assess your willingness to repay the loan, they look at 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 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the information contained in your credit reports. They do not take into account your income, savings, amount of down payment, or factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other irrelevant factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad in your credit report. Late payments count against you, but a record of paying on time will improve it.

Your credit report must have at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This payment history ensures that there is enough information in your report to build an accurate score. Some people don't have a long enough credit history to get a credit score. They should build up credit history before they apply.

At United Lending LLC, we answer questions about Credit reports every day. Call us at 512-592-5462.