Credit Scores

Before lenders decide to lend you money, they need to know that you are willing and able to pay back that mortgage. To assess your ability to pay back the loan, they assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Credit scores only assess the information in your credit reports. They never consider your income, savings, down payment amount, or factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding any other demographic factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from both the good and the bad of your credit history. Late payments count against you, but a record of paying on time will raise it.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is sufficient information in your credit to generate an accurate score. If you don't meet the criteria for getting a credit score, you may need to establish your credit history before you apply for a mortgage.

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