Credit Scoring

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Before deciding on what terms they will offer you a mortgage loan, lenders want to discover two things about you: whether you can repay the loan, and your willingness to repay the loan. To understand 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 original FICO score to help lenders assess creditworthiness. For details on FICO, read more here.

Your credit score comes from your history of repayment. They do not consider income, savings, amount of down payment, or demographic factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess a borrower's willingness to pay without considering any other demographic factors.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score comes from the good and the bad of your credit history. Late payments count against you, but a record of paying on time will raise it.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is sufficient information in your credit to calculate a score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building credit history before they apply for a loan.

Diamond Mortgage Company can answer questions about credit reports and many others. Give us a call: (215) 661-9570.