Credit Scores

Before lenders make the decision to lend you money, they want to know that you are willing and able to repay that loan. To figure out your ability to repay, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (very high risk) to 850 (low risk). We've written a lot more on FICO here.

Your credit score is a result of your repayment history. They never consider income, savings, amount of down payment, or demographic factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to consider solely that which was relevant to a borrower's willingness to repay a loan.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score reflects both the good and the bad 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, you must have an active credit account with six months of payment history. This payment history ensures that there is enough information in your report to generate an accurate score. Should you not meet the minimum criteria for getting a credit score, you might need to establish a credit history before you apply for a mortgage loan.

At CHASE MORTGAGE, Inc. #317430, we answer questions about Credit reports every day. Call us at 4357556622.