About Your Credit Score

Before lenders decide to give you a loan, they want to know that you are willing and able to repay that loan. To assess whether you can repay, they assess your income and debt ratio. To calculate your willingness to repay the loan, they consult your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Your credit score is a direct result of your history of repayment. They never take into account your income, savings, amount of down payment, or factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider solely what was relevant to a borrower's willingness to repay a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative information in your credit report. Late payments will lower your credit score, but consistently making future payments on time will raise your score.

Your report must 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 sufficient information in your credit to calculate a score. Should you not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

Tenby J. Dahman can answer your questions about credit reporting. Call us at (303) 862-7760.