A Score that Really Matters: The Credit Score

Before lenders decide to give you a loan, they must know if you are willing and able to repay that mortgage loan. To assess your ability to pay back the loan, lenders look at your debt-to-income ratio. To calculate your willingness to pay back the mortgage loan, they consult your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.

Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to consider solely what was relevant to a borrower's likelihood to pay back a loan.

Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scoring. Your score results from positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.

To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your credit to generate a score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building up credit history before they apply for a loan.

Blue Door Mortgage can answer questions about credit reports and many others. Give us a call: (617) 527-BLUE(2583).

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