About Your Credit Score

Before they decide on the terms of your loan (which they base on their risk), lenders need to know two things about you: your ability to pay back the loan, and if you are willing to pay it back. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

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

Credit scores only consider the information contained in your credit profile. They never consider income, savings, down payment amount, or 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 first invented as it is in the present day. Credit scoring was invented as a way to consider only that which was relevant to a borrower's willingness to pay back the lender.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from the good and the bad in your credit history. Late payments count against you, but a record of paying on time will raise it.

To get a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your credit to generate a score. Should you not meet the criteria for getting a score, you may need to establish your credit history before you apply for a mortgage loan.

At North American Financial, we answer questions about Credit reports every day. Call us: 702-524-1376.