Credit Scores

Before deciding on what terms they will offer you a mortgage loan, lenders want to discover two things about you: whether you can repay the loan, and if you are willing to pay it back. To understand whether you can repay, they look at your income and debt ratio. To assess your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company developed the original FICO score to assess creditworthines. We've written a lot more about FICO here.

Your credit score is a 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 invented as a way to consider solely that which was relevant to a borrower's willingness to pay back the lender.

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

Your 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 sufficient information in your report to build an accurate score. If you don't meet the criteria for getting a score, you might need to work on a credit history prior to applying for a mortgage.

First Southeast Mortgage Corporation can answer your questions about credit reporting. Give us a call: 954.920.9799.

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