About Your Credit Score

Before deciding on what terms they will offer you a loan, lenders want to know two things about you: whether you can pay back the loan, and your willingness to pay back the loan. To understand whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

The most widely 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). You can learn more on FICO here.

Credit scores only consider the information in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed as a way to take into account solely that which was relevant to a borrower's likelihood to pay back a loan.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score reflects the good and the bad in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

For the agencies to calculate a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is sufficient information in your report to calculate an accurate score. Should you not meet the minimum criteria for getting a credit score, you might need to establish your credit history prior to applying for a mortgage.

First Community Bank of Central Al. can answer questions about credit reports and many others. Call us: (334) 285-8850.

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