About Your Credit Score

Before they decide on the terms of your mortgage loan (which they base on their risk), lenders want to discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To assess your ability to pay back the loan, they look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

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

Credit scores only take into account the information contained in your credit profile. They don't consider income, savings, down payment amount, or personal factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is in the present day. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's willingness to repay the lender.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

To get a credit score, borrowers must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your credit to generate a score. If you don't meet the minimum criteria for getting a score, you might need to establish your credit history prior to applying for a mortgage.

Omni Mortgage Corp. can answer your questions about credit reporting. Call us at 7184417000.