Credit Scoring

Before lenders make the decision to lend you money, they need to know if you're willing and able to repay that mortgage. To figure out your ability to pay back the loan, they look at your debt-to-income ratio. To assess your willingness to repay the loan, they consult your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written more about FICO here.

Credit scores only assess the information contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other demographic factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is based on the good and the bad of your credit history. Late payments will lower your credit score, but consistently making future payments on time will improve your score.

For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This history ensures that there is enough information in your credit to assign an accurate score. Some people don't have a long enough credit history to get a credit score. They should build up credit history before they apply for a loan.

Nationwide Home Loans can answer your questions about credit reporting. Give us a call at 5626935048.