About Your Credit Score

Before lenders decide to give you a loan, they want to know if you are willing and able to repay that mortgage loan. To assess whether you can repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written more about FICO here.

Your credit score comes from your history of repayment. 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 invented as it is in the present day. Credit scoring was invented as a way to take into account solely what was relevant to a borrower's likelihood to repay the lender.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score is based on the good and the bad of your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your credit report should contain 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. Some people don't have a long enough credit history to get a credit score. They should spend a little time building a credit history before they apply.

Saab Mortgage can answer questions about credit reports and many others. Give us a call: 703-288-0777.

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