Credit Scoring

Before deciding on what terms they will offer you a loan, lenders need to know two things about you: your ability to pay back the loan, and if you are willing to pay it back. To assess your ability to repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

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

Your credit score is a direct result of your repayment history. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is now. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering other irrelevant factors.

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

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

Nationwide Home Loans can answer questions about credit reports and many others. Give us a call at 5626935048.

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Nationwide Home Loans

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8152 Painter Ave., Ste 200
Whittier, CA 90602-3760