Credit Scores

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Before lenders make the decision to give you a loan, they have to know that you're willing and able to pay back that loan. To assess your ability to repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

The most widely used credit scores are called FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (high risk) to 850 (low risk). We've written more on FICO here.

Credit scores only take into account the info contained in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan while specifically excluding other irrelevant factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is based on both the good and the bad in your credit history. Late payments count against your score, but a consistent record of paying on time will improve it.

To get 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 credit to calculate 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 a credit history before they apply.

Reliant Mortgage Ltd can answer your questions about credit reporting. Call us: (214) 545-5700.