A Score that Really Matters: Your Credit Score

Before deciding on what terms they will offer you a loan, lenders need to know two things about you: your ability to pay back the loan, and how committed you are to repay the loan. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. You can find out more about FICO here.

Your credit score comes from your repayment history. They never consider your income, savings, amount of down payment, or demographic factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is now. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to pay back a loan.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score comes from both the good and the bad of your credit history. Late payments count against your score, but a consistent record of paying on time will improve it.

Your credit 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 payment history ensures that there is sufficient information in your credit to assign an accurate score. Some people don't have a long enough credit history to get a credit score. They should build up credit history before they apply.

Reliance Mortgage Service, Inc can answer your questions about credit reporting. Call us: 5623200510.