Credit Scores

Before deciding on what terms they will offer you a loan, lenders must find out two things about you: whether you can repay the loan, and your willingness to repay the loan. To figure out your ability to pay back the loan, lenders assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

The most commonly used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (high risk) to 850 (low risk). We've written a lot more on FICO here.

Your credit score comes from your repayment history. They never consider income, savings, down payment amount, or demographic factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to take into account solely that which was relevant to a borrower's likelihood to pay back a loan.

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

Your credit report should 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 assign a score. Some borrowers don't have a long enough credit history to get a credit score. They should spend some time building up a credit history before they apply for a loan.

At Nationwide Home Loans, we answer questions about Credit reports every day. Call us: 5626935048.

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Nationwide Home Loans

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16211 Whittier Blvd.
Whittier, CA 90603