Credit Scoring

Before lenders make the decision to lend you money, they have to know if you're willing and able to pay back that mortgage. To assess whether you can repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company developed the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Your credit score comes from your history of repayment. They don't take into account income, savings, down payment amount, or demographic factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on both the good and the bad in 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.

To get 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 build an accurate score. Should you not meet the criteria for getting a credit score, you might need to work on a credit history prior to applying for a mortgage loan.

Coastal Mortgage Corp. can answer questions about credit reports and many others. Give us a call at 504-866-5626.

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