Your Credit Score: What it means

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Before lenders decide to lend you money, they want to know if you're willing and able to repay that mortgage loan. To figure out your ability to pay back the loan, they look at your debt-to-income ratio. In order to calculate your willingness to repay the loan, they consult your credit score.

The most widely used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.

Credit scores only consider the information in your credit reports. They do not take into account income, savings, amount of down payment, or factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider only what was relevant to a borrower's willingness to pay back a loan.

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

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

Mortgage Affiliates of America, Inc. can answer questions about credit reports and many others. Call us at 203-730-4070.