About Your Credit Score

Before lenders make the decision to give you a loan, they must know that you're willing and able to pay back that mortgage loan. To figure out your ability to repay, they assess your debt-to-income ratio. In order to assess your willingness to repay the 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. Your FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only assess the information in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is today. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to repay the lender.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

Your 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 sufficient information in your report to generate an accurate score. If you don't meet the criteria for getting a score, you might need to work on a credit history prior to applying for a mortgage.

Community Trust Lending Team at Norcom Mortgage-NMLS ID#71655 can answer questions about credit reports and many others. Give us a call: (203) 526-9345.


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