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 mortgage. To assess your ability to pay back the loan, lenders look at your debt-to-income ratio. To assess your willingness to pay back the loan, they look at your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (very high risk) to 850 (low risk). We've written more about FICO here.

Your credit score is a result of your history of repayment. They do not take into account income, savings, down payment amount, or personal factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider solely that which was relevant to a borrower's likelihood to repay the lender.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of credit inquiries are all calculated into credit scores. Your score reflects the good and the bad in your credit history. Late payments lower your score, but consistently making future payments on time will raise your score.

For the agencies to calculate a credit score, you must have an active credit account with a payment history of at least six months. This history ensures that there is sufficient information in your report to build a score. If you don't meet the minimum criteria for getting a score, you might need to work on a credit history prior to applying for a mortgage.

CHASE MORTGAGE, Inc. #317430 can answer questions about credit reports and many others. Give us a call: 4357556622.