About Your Credit Score
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Before lenders make the decision to lend you money, we want to know if you're willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.
Fair Isaac and Company formulated the original FICO score to help lenders assess creditworthiness. You can find out more on FICO here.
Credit scores only consider the info contained in your credit reports. They do not take into account income, savings, down payment amount, or personal factors like sex race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when these scores were invented as it is now. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding any other personal factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score results from both positive and negative information in your credit report. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.
For the agencies to calculate a credit score, you must have an active credit account with six months of payment history. This payment 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 build up credit history before they apply.
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