A Score that Really Matters: Your Credit Score

Before lenders make the decision to lend you money, they want to know that you're willing and able to pay back that mortgage. To assess your ability to 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 formulated the first FICO score to assess creditworthines. We've written a lot more about FICO here.

Your credit score comes from your history of repayment. They do not consider income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess willingness to pay while specifically excluding any other personal factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated from both the good and the bad in your credit history. Late payments count against you, but a record of paying on time will raise it.

For the agencies to calculate a credit score, you must have an active credit account with at least six months of payment history. This payment history ensures that there is sufficient information in your report to build a score. If you don't meet the minimum criteria for getting a score, you might need to establish a credit history before you apply for a mortgage.

Savers Home Loans can answer questions about credit reports and many others. Give us a call at (800) 974-0509.