About Your Credit Score

Before lenders decide to give you a loan, they have to know that you're willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they look at your income and debt ratio. In order to assess your willingness to pay back the loan, they look at your credit score.

The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can learn more on FICO here.

Credit scores only consider the info in your credit reports. They do not take into account your income, savings, amount of down payment, or personal factors like gender, race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were first invented as it is now. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's willingness to pay back a loan.

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

Your report should 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 report to assign an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to spend some time building a credit history before they apply.

Foxfield Financial can answer questions about credit reports and many others. Call us at 720-598-8300.