Credit Scoring

Before deciding on what terms they will offer you a loan, lenders must know two things about you: your ability to repay the loan, and how committed you are to repay the loan. To understand whether you can pay back the loan, they assess your income and debt ratio. In order to assess your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. You can learn more on FICO here.

Credit scores only assess the info contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to take into account solely that which was relevant to a borrower's likelihood to pay back a loan.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated wtih both positive and negative items in your credit report. Late payments count against your score, but a record of paying on time will raise it.

For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is enough information in your report to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend some time building up a credit history before they apply for a loan.

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