Your Credit Score: What it means

Before deciding on what terms they will offer you a mortgage loan, lenders need to find out two things about you: your ability to repay the loan, and if you will pay it back. To understand your ability to repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can learn more on FICO here.

Your credit score is a direct result of your repayment history. They never consider your income, savings, amount of down payment, or factors like sex ethnicity, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering any other irrelevant factors.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scoring. Your score considers positive and negative information in your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.

Your credit report should 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 enough information in your report to generate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend a little time building up a credit history before they apply for a loan.

At Boardwalk Mortgage, we answer questions about Credit reports every day. Call us: 1-800-606-2794.