Lending is a risky business, so it is important that lenders have a sense of your ability and willingness to pay back the loan. They determine this by reviewing your income-to-debt obligation ratio and your credit score.
FICO credit scores are the most widely used. Your FICO score is between 350 (high risk) and 850 (low risk).
Credit scores only consider the information contained in your credit profile. They do not consider income, savings, down payment amount, gender, race, nationality or marital status.
Your credit score is determined by many factors, positive and negative. A good credit score can be maintained by making payments on time and maintaining a low income-to-debt obligation ratio. Your credit score is negatively affected by late payments.
Have you made late payments? Don’t worry. The occasional late payment can be offset by reestablishing a good record of on-time payments. A good payment record is heavily weighted in determining your credit score:
35% of your FICO score is based on your specific payment history
30% is your current level of indebtedness
15% is the time your open credit has been in use (the older the better)
15% accounts for the types of credit available to you, such as installment loans versus revolving and debit accounts
5% percent is pursuit of new credit
To have an accurate credit score, your credit profile must contain at least one account which has been open for six months or more, and contain at least one account that has been used in the past six months. If those requirements are not met, it may be necessary to establish a 6 month credit history prior to applying for a mortgage loan.
BroadStreet Financial Group 200 Providence Mine Rd, Ste 110 NEVADA CITY, CA 95959
What is a credit score?
