Credit Scoring

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Before lenders make the decision to lend you money, they need to know that you're willing and able to pay back that loan. To figure out your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The 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, amount of down payment, or factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were invented as it is today. Credit scoring was developed to assess willingness to pay without considering any other demographic factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments lower your credit score, but consistently making future payments on time will raise your score.

Your credit 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 payment history ensures that there is enough information in your credit to build an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building up credit history before they apply for a loan.

Inlet Mortgage Corporation can answer your questions about credit reporting. Call us at 561-792-4323.