Your Credit Score: What it means

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Before lenders decide to lend you money, they need to know that you are willing and able to pay back that mortgage. To understand whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to assess creditworthiness. We've written more about FICO here.

Credit scores only assess the information in your credit reports. They don't take into account income, savings, down payment amount, or demographic factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's likelihood to pay back the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.

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

Mainstreet Mortgage can answer your questions about credit reporting. Give us a call at (818) 874-9900.