A Score that Really Matters: Your Credit Score

Before lenders decide to lend you money, they want to know if you're willing and able to pay back that loan. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to pay back the loan, they consult your credit score.

Fair Isaac and Company calculated the first FICO score to assess creditworthines. For details on FICO, read more here.

Credit scores only consider the info contained in your credit reports. They do not take into account income, savings, amount of down payment, or factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was invented as a way to consider solely what was relevant to a borrower's willingness to repay a loan.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is based on both the good and the bad in your credit report. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

Your credit report must contain 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 credit to calculate a 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.

At Nationwide Home Loans, we answer questions about Credit reports every day. Call us at (562) 693-5048.

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