Your Credit Score: What it means
Before lenders decide to give you a loan, they need to know if you are willing and able to pay back that loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. In order to assess your willingness to repay the mortgage loan, they look at your credit score.
Fair Isaac and Company calculated the original FICO score to assess creditworthines. You can learn more about FICO here.
Credit scores only take into account the information in your credit reports. They never consider income, savings, down payment amount, or factors like sex race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering other demographic factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will improve it.
To get a credit score, borrowers must have an active credit account with at least six months of payment history. This payment history ensures that there is sufficient information in your credit to assign an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend some time building credit history before they apply.
Reliance Mortgage Service, Inc can answer your questions about credit reporting. Give us a call: 562 320-0510.