Credit Scores

Before lenders make the decision to lend you money, they have to know that you're willing and able to repay that loan. To understand whether you can repay, they look at your income and debt ratio. In order to calculate your willingness to pay back the loan, they consult your credit score.

The most commonly used credit scores are 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 on FICO here.

Your credit score is a result of your repayment history. They do not consider your income, savings, amount of down payment, or personal factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering any other irrelevant factors.

Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the 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 improve your score.

To get a credit score, you must have an active credit account with a payment history of six months. This history ensures that there is sufficient information in your credit to calculate 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.

At American Mortgage Advisers, Inc, we answer questions about Credit reports every day. Call us at 2147390569.