Credit Scoring

Before they decide on the terms of your mortgage loan (which they base on their risk), lenders want to know two things about you: your ability to repay the loan, and how committed you are to repay the loan. To assess your ability to pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. We've written more on FICO here.

Your credit score is a direct result of your repayment history. They never consider income, savings, amount of down payment, or factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when FICO scores were first invented as it is now. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding any other personal factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score comes from the good and the bad of your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your credit report must 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 history ensures that there is enough information in your report to build an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to spend some time building a credit history before they apply.

Coastal Mortgage Corp. can answer your questions about credit reporting. Call us: 504-866-5626.

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