Credit Scores

Before lenders decide to lend you money, they must know that you're willing and able to pay back that mortgage loan. To assess your ability to repay, lenders look at your debt-to-income ratio. In order to assess your willingness to repay the 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 info contained in your credit reports. They don't consider your income, savings, down payment amount, or factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider solely that which was relevant to a borrower's likelihood to repay the lender.

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

To get a credit score, you must have an active credit account with at least six months of payment history. This payment history ensures that there is enough information in your report to assign an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend some time building up a credit history before they apply.

Wize Mortgage LLC can answer questions about credit reports and many others. Give us a call at .