About Your Credit Score

Before lenders make the decision to lend you money, they must know that you're willing and able to pay back that loan. To understand whether you can repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (very high risk) to 850 (low risk). We've written a lot more on FICO here.

Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was invented as a way to consider solely what was relevant to a borrower's willingness to repay the lender.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated from both the good and the bad of your credit report. Late payments will lower your score, but consistently making future payments on time will raise your score.

To get a credit score, you must have an active credit account with six months of payment history. This payment history ensures that there is sufficient information in your credit to assign a score. If you don't meet the criteria for getting a score, you might need to establish your credit history prior to applying for a mortgage loan.

At Milestone Mortgage, Inc. NMLS#136714, we answer questions about Credit reports every day. Call us: 3175959600.