About Your Credit Score

Before lenders decide to give you a loan, they want to know if you're willing and able to pay back that mortgage. To assess your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company developed the first FICO score to assess creditworthines. You can learn more about FICO here.

Your credit score comes from your repayment history. They do not take into account income, savings, down payment amount, or personal factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when these scores were invented as it is in the present day. Credit scoring was developed to assess a borrower's willingness to pay without considering other personal factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will raise it.

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

Hill Valley Financial Services Inc. can answer your questions about credit reporting. Call us: 503-657-3311.