Credit Scoring

Before lenders decide to lend you money, they need to know if you're willing and able to repay that mortgage loan. To assess your ability to repay, they assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. We've written more on FICO here.

Credit scores only assess the info in your credit profile. They never consider income, savings, amount of down payment, or factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's willingness to pay back the lender.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is based on both the good and the bad in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.

Your report must 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 history ensures that there is sufficient information in your report to calculate an accurate score. If you don't meet the criteria for getting a score, you may need to establish your credit history prior to applying for a mortgage loan.

La Paz Mortgage can answer your questions about credit reporting. Give us a call: 9497706067.

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