Credit Scoring

Before lenders make the decision to give you a loan, they want to know that you are willing and able to pay back that loan. To understand whether you can repay, they assess your income and debt ratio. In order to calculate your willingness to repay the loan, they look at your credit score.

Fair Isaac and Company calculated the original FICO score to assess creditworthines. For details on FICO, read more here.

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is in the present day. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering any other demographic factors.

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

To get a credit score, borrowers must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your credit to calculate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend a little time building up credit history before they apply.

Community Mortgage, LLC (NMLS: #224143) can answer questions about credit reports and many others. Give us a call: (816) 595-0664.