A Score that Really Matters: The Credit Score

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Before they decide on the terms of your mortgage loan, lenders need to know two things about you: whether you can pay back the loan, and if you are willing to pay it back. To figure out your ability to pay back the loan, lenders assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to assess creditworthiness. You can learn more on FICO here.

Credit scores only assess the info in your credit reports. They do not consider your income, savings, down payment amount, or factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess a borrower's willingness to pay without considering other demographic factors.

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 history. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve 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. If you don't meet the criteria for getting a score, you might need to work on your credit history before you apply for a mortgage loan.

Mann Mortgage can answer your questions about credit reporting. Call us at 808-440-0910.