Credit Scoring

Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders need to find out two things about you: your ability to repay the loan, and if you are willing to pay it back. To understand whether you can pay back the loan, they assess your income and debt ratio. To calculate your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company calculated the original FICO score to assess creditworthines. For details on FICO, read more here.

Your credit score is a direct result of your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were invented as it is now. Credit scoring was developed as a way to take into account solely what 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 the number of inquiries are all considered in credit scores. Your score considers 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 a payment history of at least six months. This history ensures that there is enough information in your report to calculate a score. If you don't meet the criteria for getting a credit score, you might need to establish a credit history prior to applying for a mortgage loan.

CHASE MORTGAGE, Inc. #317430 can answer your questions about credit reporting. Give us a call: 4357556622.