About Your Credit Score

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Before lenders make the decision to give you a loan, they must know if you are willing and able to pay back that mortgage loan. To assess whether you can repay, they assess your income and debt ratio. To assess your willingness to pay back the loan, they look at your credit score.

The most widely used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (very high risk) to 850 (low risk). We've written a lot more on FICO here.

Your credit score is a direct result of your history of repayment. They don't consider income, savings, down payment amount, or demographic factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess a borrower's willingness to pay without considering any other irrelevant factors.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scoring. Your score reflects both the good and the bad in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.

Your report should have 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 an accurate score. Some folks don't have a long enough credit history to get a credit score. They should build up a credit history before they apply.

Consumer First Mortgage can answer questions about credit reports and many others. Call us: (256) 586-5626.