About Your Credit Score

Before lenders make the decision to give you a loan, they have to know if you are willing and able to repay that loan. To assess your ability to repay, they look at your debt-to-income ratio. In order to assess your willingness to pay back the loan, they look at your credit score.

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

Credit scores only consider the info contained in your credit reports. They never take into account your income, savings, amount of down payment, or demographic factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when these scores were first invented as it is now. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's willingness to repay a loan.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is calculated from 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.

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 build an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should build up a credit history before they apply.

At Channel Mortgage LLC, we answer questions about Credit reports every day. Call us at (718) 639-9500.

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