Credit Scoring

Before they decide on the terms of your mortgage loan (which they base on their risk), lenders must know two things about you: whether you can pay back the loan, and your willingness to pay back the loan. To assess your ability to pay back the loan, they look at your debt-to-income ratio. In order to assess your willingness to repay the mortgage loan, they consult your credit score.

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

Credit scores only assess the information in your credit reports. They do not consider income, savings, amount of down payment, or demographic factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to pay while specifically excluding other personal factors.

Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score is based on the good and the bad of your credit history. Late payments lower your score, but consistently making future payments on time will raise your score.

Your credit report must 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 enough information in your report to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply for a loan.

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