Credit Scores

Before deciding on what terms they will offer you a loan, lenders need to find out two things about you: your ability to pay back the loan, and your willingness to pay back the loan. To assess whether you can repay, they look at your income and debt ratio. In order to calculate your willingness to repay the loan, they consult your credit score.

Fair Isaac and Company calculated the original FICO score to assess creditworthines. We've written more on FICO here.

Credit scores only take into account the info contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is today. Credit scoring was developed to assess willingness to pay while specifically excluding other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad of your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

For the agencies to calculate a credit score, borrowers must have an active credit account with six months of payment history. This history ensures that there is enough information in your report to calculate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to build up a credit history before they apply for a loan.

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