Credit Scores

	Searching for a loan? We can help! Call us at (805) 432-4898. Want to get started? Apply Now.

Before they decide on the terms of your mortgage loan, lenders need to discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to pay back the loan, they look at your credit score.

The most widely 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.

Credit scores only take into account the info in your credit reports. They never take into account income, savings, amount of down payment, or factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider solely that which was relevant to a borrower's willingness to pay back the lender.

Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score is calculated with positive and negative information in your credit report. Late payments count against you, but a record of paying on time will improve it.

Your credit report should 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 sufficient information in your report to build a score. Should you not meet the minimum criteria for getting a score, you may need to work on a credit history prior to applying for a mortgage loan.

CFC Mortgage Bankers can answer your questions about credit reporting. Call us at (805) 432-4898.