Your Credit Score: What it means

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Before lenders decide to lend you money, they must know that you're willing and able to pay back that mortgage loan. To assess whether you can 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 calculated the first FICO score to assess creditworthines. We've written more about FICO here.

Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed to assess 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 in your credit report. Late payments count against your score, but a consistent record of paying on time will raise it.

For the agencies to calculate 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 report to generate an accurate score. Should you not meet the criteria for getting a score, you might need to establish a credit history before you apply for a mortgage loan.

San Diego Financial can answer your questions about credit reporting. Call us at 760-415-2345.