About Your Credit Score
Before lenders decide to give you a loan, they must know that you're willing and able to repay that mortgage. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. In order to calculate your willingness to pay back the mortgage loan, they consult your credit score.
The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). We've written a lot more about FICO here.
Credit scores only take into account the information contained in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess willingness to pay while specifically excluding other irrelevant factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated from both the good and the bad in your credit report. Late payments count against your score, but a record of paying on time will improve it.
To get a credit score, you must have an active credit account with six months of payment history. This payment history ensures that there is sufficient information in your credit to generate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should spend a little time building up a credit history before they apply.
First Community Bank of Central Al. can answer your questions about credit reporting. Call us at (334) 285-8850.