Your Credit Score: What it means

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Before lenders make the decision to give you a loan, they have to know if you are willing and able to pay back that mortgage. To figure out your ability to pay back the loan, lenders assess your debt-to-income ratio. In order to assess your willingness to pay back the mortgage loan, they consult your credit score.

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

Your credit score is a direct result of your history of repayment. They do not consider your income, savings, down payment amount, or personal factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was envisioned as a way to assess willingness to pay without considering other personal factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad of your credit history. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

To get a credit score, borrowers must have an active credit account with six months of payment history. This payment history ensures that there is sufficient information in your credit to calculate a score. Some people don't have a long enough credit history to get a credit score. They should build up a credit history before they apply.

At Capital Faith Financial Services LLC., we answer questions about Credit reports every day. Give us a call: 2039758552.