About Your Credit Score

Before lenders make the decision to give you a loan, they have to know that you're willing and able to pay back that mortgage. To assess your ability to pay back the loan, lenders assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

The most commonly used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). We've written more about FICO here.

Your credit score comes from your history of repayment. They don't take into account income, savings, down payment amount, or personal factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding any other irrelevant 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 wtih positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will improve it.

To get a credit score, borrowers must have an active credit account with at least six months of payment history. This payment history ensures that there is sufficient information in your credit to generate a score. Some borrowers don't have a long enough credit history to get a credit score. They should spend a little time building up a credit history before they apply for a loan.

At Pinnacle Lending Group, Inc., we answer questions about Credit reports every day. Call us: 7027302085.

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