About Your Credit Score

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

The most widely used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only assess the information in your credit reports. They don't consider your income, savings, down payment amount, or demographic factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's willingness to repay the lender.

Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scores. Your score results from positive and negative items in your credit report. Late payments count against your score, but a record of paying on time will raise it.

Your report must 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 sufficient information in your report to calculate a score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend a little time building a credit history before they apply.

Homewithloan.com can answer your questions about credit reporting. Give us a call at 9727982110.


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4815 State Hwy 121 Suite 2
The Colony, TX 75056