A Score that Really Matters: The Credit Score

	Shopping for a mortgage loan? We will be glad to help! Give us a call at (817) 821-5179. Ready to begin? Apply Now.

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

The most widely used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only assess 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 dirty a word when FICO scores were invented as it is now. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's likelihood to repay a loan.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from 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.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This payment history ensures that there is enough 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 a credit history before they apply for a loan.

FNB Town Square Mortgage can answer questions about credit reports and many others. Call us at (817) 821-5179.