Your Credit Score: What it means

Before lenders decide to give you a loan, they need to know if you're willing and able to pay back that mortgage loan. To figure out 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. You can find out more on FICO here.

Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed to assess willingness to pay without considering other personal factors.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score results from positive and negative items in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.

Your credit report should 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 history ensures that there is enough information in your report to build a 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.

Saab Mortgage can answer questions about credit reports and many others. Call us: 703-288-0777.

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