Credit Scores

Before lenders decide to give you a loan, they must know if you are willing and able to repay that loan. To understand your ability to pay back the loan, they assess your income and debt ratio. In order to calculate your willingness to pay back the loan, they consult your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). We've written a lot more on FICO here.

Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is in the present day. Credit scoring was envisioned as a way to take into account only what was relevant to a borrower's willingness to pay back a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative items in your credit report. Late payments count against you, but a record of paying on time will improve it.

For the agencies to calculate a credit score, borrowers must have an active credit account with six months of payment history. This payment history ensures that there is enough information in your credit to build an accurate score. Should you not meet the minimum criteria for getting a score, you may need to work on your credit history before you apply for a mortgage loan.

AccessOne Mortgage can answer questions about credit reports and many others. Give us a call: 919-787-6080.