Credit Scoring

Before lenders decide to give you a loan, they want to know if you are willing and able to repay that mortgage. To assess your ability to repay, they look at your income and debt ratio. In order to assess your willingness to repay the loan, they consult your credit score.

Fair Isaac and Company calculated the first FICO score to assess creditworthines. We've written more on FICO here.

Your credit score is a direct result of your repayment history. They never take into account income, savings, down payment amount, or factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were first invented as it is in the present day. Credit scoring was invented as a way to take into account solely what was relevant to a borrower's willingness to repay the lender.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad in your credit history. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

Your credit 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 history ensures that there is sufficient information in your credit to calculate a score. Should you not meet the criteria for getting a credit score, you may need to establish a credit history prior to applying for a mortgage loan.

At First Community Bank of Central Al., we answer questions about Credit reports every day. Give us a call: (334) 285-8850.

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