About Your Credit Score

Before lenders decide to give you a loan, they must know if you are willing and able to pay back that mortgage loan. To assess your ability to pay back the loan, they look at your debt-to-income ratio. To calculate your willingness to pay back the mortgage loan, they consult your credit score.

The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). For details on FICO, read more here.

Your credit score is a result of your history of repayment. They do not consider your income, savings, down payment amount, or personal factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding other irrelevant factors.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all considered in credit scoring. Your score considers both positive and negative information in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

Your report must have at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This history ensures that there is enough information in your report to calculate 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 up credit history before they apply.

American Commerce Mortgage can answer questions about credit reports and many others. Give us a call: 714-970-9700.

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