Credit Scoring

Before lenders make the decision to give you a loan, they have to know if you're willing and able to pay back that mortgage. To understand whether you can repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Your credit score comes from your history of repayment. They never take into account your income, savings, amount of down payment, or demographic factors like gender, race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to take into account only that which was relevant to a borrower's willingness to repay a loan.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from both the good and the bad in your credit report. Late payments lower your score, but consistently making future payments on time will raise your score.

Your credit report should have 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 payment history ensures that there is enough information in your report to build an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building a credit history before they apply for a loan.

At U.S.A. Lending, Inc., we answer questions about Credit reports every day. Give us a call at 305-967-7200.