About Your Credit Score

Before lenders make the decision to give you a loan, they must know if you're willing and able to pay back that mortgage. To assess whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay the loan, they consult your credit score.

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

Credit scores only consider the information contained in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when these scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering any other demographic factors.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scores. Your score reflects the good and the bad in your credit history. Late payments count against you, but a consistent record of paying on time will improve it.

Your credit report must have 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 an accurate score. Should you not meet the minimum criteria for getting a credit score, you might need to work on a credit history prior to applying for a mortgage loan.

Coleman Mortgage Company can answer questions about credit reports and many others. Call us at 972-932-9083.


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