Before deciding on what terms, they will offer you a loan, lenders must find out two things about you: whether you can pay back the loan, and if you are willing to pay it bac. To figure out your ability to pay back the loan, lenders assess your debt-to-income ratio (/Debt-to-IncomeRatios). In order to calculate your willingness to pay back the mortgage loan, they consult your credit score.
Fair Isaac and Company developed the first FICO score to help lenders assess creditworthiness. You can nd out more on FICO here (/YourFICOScore).
Credit scores only take into account the info in your credit reports. They don’t consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess a borrower’s willingness to pay without considering other demographic factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
To get a credit score, you must have an active credit account with a payment history of six months. This payment history ensures that there is enough information in your report to calculate an accurate score. If you don’t meet the criteria for getting a credit score, you may need to establish your credit history prior to applying for a mortgage loan.
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