A Score that Really Matters: Your Credit Score

Before lenders decide to give you a loan, they need to know if you are willing and able to pay back that loan. To understand whether you can pay back the loan, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company formulated the original FICO score to assess creditworthines. You can find out more about FICO here.

Credit scores only take into account the info contained 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 envisioned as a way to assess a borrower's willingness to repay the loan while specifically excluding any other personal factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated from both the good and the bad in your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.

To get a credit score, you must have an active credit account with six months of payment history. This payment history ensures that there is enough information in your credit to build a score. If you don't meet the minimum criteria for getting a score, you might need to establish your credit history before you apply for a mortgage.

At Blue Door Mortgage, we answer questions about Credit reports every day. Give us a call: (617) 527-BLUE(2583).

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