Credit Scores

Before deciding on what terms they will offer you a loan, lenders want to find out two things about you: whether you can repay the loan, and if you are willing to pay it back. To figure out your ability to repay, they assess your debt-to-income ratio. To assess your willingness to pay back the loan, they consult your credit score.

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

Credit scores only consider the information contained in your credit profile. They never consider your income, savings, down payment amount, or factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were invented as it is in the present day. Credit scoring was developed to assess willingness to repay the loan while specifically excluding other demographic factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score considers both positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.

Your report should contain 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 history ensures that there is sufficient information in your credit to assign an accurate score. Some folks don't have a long enough credit history to get a credit score. They should spend a little time building a credit history before they apply for a loan.

Secure Mortgage Company can answer questions about credit reports and many others. Call us at (713) 667-5472.