Your Credit Score: What it means

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Before lenders decide to give you a loan, they must know that you're willing and able to pay back that loan. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

The most commonly used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (very high risk) to 850 (low risk). You can find out more on FICO here.

Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when these scores were first invented as it is in the present day. Credit scoring was developed to assess willingness to pay without considering any other irrelevant factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is based on both the good and the bad of your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.

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

Florida State Mortgage Group, Inc. can answer your questions about credit reporting. Call us at 954-359-3000.