About Your Credit Score

Before deciding on what terms they will offer you a loan (which they base on their risk), lenders need to know two things about you: whether you can repay the loan, and your willingness to repay the loan. To assess whether you can pay back the loan, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can learn more on FICO here.

Credit scores only assess the info in your credit profile. They do not take into account your income, savings, amount of down payment, or demographic factors like gender, race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess willingness to pay while specifically excluding any other personal factors.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scores. Your score is calculated from the good and the bad of your credit report. Late payments count against your score, but a record of paying on time will raise it.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is enough information in your report to build an accurate score. If you don't meet the criteria for getting a credit score, you might need to establish your credit history before you apply for a mortgage.

Boardwalk Mortgage can answer your questions about credit reporting. Give us a call at 1-800-606-2794.