Financing Homes in Lake Tahoe and Truckee since 1992.

What is a credit score

Credit Scores

Before lenders decide to give you a loan, they want to know that you are willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they assess your income and debt ratio. To assess how willing you are 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. The FICO score ranges from 350 (very high risk) to 850 (low risk). You can learn more about FICO here.

Credit scores only assess the info contained in your credit reports. They don’t consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to consider only that which was relevant to a borrower’s likelihood to repay the lender.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score considers both positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will raise it.

Your credit report should have 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 credit to build a score. Should you not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage loan.

Please contact us to learn more about financing your home 1 (775) 831-7151