A Score that Really Matters: Your Credit Score

Before lenders make the decision to give you a loan, they need to know if you are willing and able to pay back that mortgage. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

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

Credit scores only consider the information in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding any other personal 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 is calculated wtih both positive and negative information in your credit report. Late payments will lower your score, but consistently making future payments on time will improve your score.

For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your credit to generate an accurate score. If you don't meet the minimum criteria for getting a score, you might need to work on a credit history before you apply for a mortgage loan.

Nationwide Home Loans can answer your questions about credit reporting. Call us: 5626935048.