About Your Credit Score

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

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

Credit scores only consider the information in your credit profile. They do not consider income, savings, down payment amount, or factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were first invented as it is now. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other personal factors.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scoring. Your score reflects the good and the bad in your credit report. Late payments will lower your credit 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 a payment history of six months. This history ensures that there is enough information in your credit to assign a score. Some folks don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply for a loan.

At Wize Mortgage LLC, we answer questions about Credit reports every day. Call us: .