About Your Credit Score

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Before they decide on the terms of your mortgage loan, lenders must discover two things about you: whether you can pay back the loan, and if you will pay it back. To assess your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

The most commonly used credit scores are 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.

Credit scores only take into account the info contained in your credit reports. They never take into account income, savings, down payment amount, or personal factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering other irrelevant factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative information in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

For the agencies to calculate a credit score, you must have an active credit account with at least six months of payment history. This history ensures that there is sufficient information in your credit to generate an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building up credit history before they apply.

Union National Mortgage Co. can answer your questions about credit reporting. Call us at 513-234-4987.