A Score that Really Matters: The Credit Score

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Before lenders make the decision to lend you money, they want to know that you are willing and able to pay back that loan. To assess whether you can repay, they look at your income and debt ratio. In order to assess your willingness to pay back the loan, they look at your credit score.

Fair Isaac and Company developed the first FICO score to assess creditworthiness. You can learn more on FICO here.

Credit scores only consider the info in your credit reports. They don't consider your income, savings, amount of down payment, or demographic factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to repay the loan 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 considered in credit scores. Your score considers positive and negative items in your credit report. Late payments will lower your score, but consistently making future payments on time will raise your score.

Your report should 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 generate an accurate 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 for a loan.

At Home Pointe Mortgage Company, we answer questions about Credit reports every day. Give us a call: (770) 220-2800.