Credit Scores

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Before lenders make the decision to lend you money, they must know that you are willing and able to repay that mortgage. To figure out your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay the loan, they look at your credit score.

The most commonly used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the information contained in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider solely that which was relevant to a borrower's willingness to pay back a loan.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad in your credit history. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.

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

At Manhattan Financials, we answer questions about Credit reports every day. Call us: 718-766-9112.