Credit Scoring

Before they decide on the terms of your loan, lenders must know two things about you: your ability to repay the loan, and your willingness to repay the loan. To assess whether you can pay back the loan, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

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

Credit scores only consider the information contained in your credit reports. They never take into account your income, savings, amount of down payment, or factors like sex race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were invented as it is now. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to pay back the lender.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative items in your credit report. Late payments lower your credit score, but consistently making future payments on time will improve 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 enough information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to spend some time building credit history before they apply.

The Elite Lending Team at Milestone Mortgage Corporation
NMLS# 133260 can answer questions about credit reports and many others. Call us: 5613734149.