Credit Scoring

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Before lenders make the decision to give you a loan, they have to know if you are willing and able to pay back that mortgage. To figure out your ability to pay back the loan, they look at 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 assess creditworthiness. For details on FICO, read more here.

Credit scores only take into account the information contained in your credit reports. They never take into account income, savings, down payment amount, or demographic factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to pay while specifically excluding any other irrelevant factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is calculated from the good and the bad of your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making 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 payment history ensures that there is enough information in your report to calculate an accurate score. Some borrowers 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.

Envoy Mortgage, Ltd can answer questions about credit reports and many others. Give us a call: (970) 577-9200.