Credit Scoring

Before deciding on what terms they will offer you a loan, lenders want to know two things about you: your ability to repay the loan, and if you will pay it back. To understand whether you can repay, they look at your income and debt ratio. In order to calculate your willingness to repay the mortgage loan, they consult your credit score.

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

Your credit score is a result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering any other demographic factors.

Your current debt load, 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 in your credit report. Late payments lower your credit score, but consistently making future payments on time will improve your score.

Your credit 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 history ensures that there is sufficient information in your report to calculate a score. Some folks don't have a long enough credit history to get a credit score. They should spend a little time building credit history before they apply.

America's Money Source can answer your questions about credit reporting. Give us a call at 4078987559.