About Your Credit Score

Before deciding on what terms they will offer you a loan (which they base on their risk), lenders need to know two things about you: your ability to pay back the loan, and your willingness to repay the loan. To understand your ability to repay, they look at your income and debt ratio. To assess your willingness to repay the loan, they look at your credit score.

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

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's willingness to repay a loan.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated from both the good and the bad in your credit report. Late payments 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 sufficient information in your credit to calculate an accurate score. If you don't meet the minimum criteria for getting a credit score, you may need to establish a credit history before you apply for a mortgage loan.

The Elite Lending Team at Milestone Mortgage Corporation can answer your questions about credit reporting. Give us a call at 561-373-4149.