A Score that Really Matters: Your Credit Score

Before lenders decide to give you a loan, they must know if you're willing and able to repay that loan. To assess your ability to pay back the loan, they look at your income and debt ratio. To assess your willingness to repay the loan, they consult your credit score.

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

Credit scores only consider the information contained in your credit reports. They never consider income, savings, down payment amount, or personal factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were first invented as it is now. Credit scoring was developed to assess willingness to pay while specifically excluding other demographic factors.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scoring. Your score is calculated wtih both positive and negative information in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

To get a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your credit to generate a score. Some people don't have a long enough credit history to get a credit score. They should build up a credit history before they apply.

Team USA Mortgage can answer questions about credit reports and many others. Give us a call at 218-237-5128.

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