Credit Scores

Before deciding on what terms they will offer you a loan (which they base on their risk), lenders need to know two things about you: whether you can repay the loan, and your willingness to pay back the loan. To assess whether you can pay back the loan, they look at your income and debt ratio. In order to calculate your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company calculated the first FICO score to assess creditworthines. You can learn more on FICO here.

Your credit score comes from your repayment history. They don't take into account your income, savings, down payment amount, or personal factors like sex ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were invented as it is today. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's likelihood to repay the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score reflects both the good and the bad in your credit report. Late payments count against your score, but a record of paying on time will improve it.

Your credit report must have 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 generate an accurate score. Should you not meet the criteria for getting a credit score, you might need to establish your credit history prior to applying for a mortgage.

F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can answer questions about credit reports and many others. Give us a call: 214-300-8756.