What is a Credit Score?
A credit score is a number that reflects your risk level, as an individual consumer, as determined by the credit bureaus. The higher the number, the lower the risk will be to the lender. As you apply for credit, the lender will check your ability to pay back that loan. The more negative marks you have on your credit report, the less likely you will be granted the loan or credit purchase you requested. Only the credit bureaus know the exact formulas they use to determine these scores, which generally range from 350 (lowest) to 850 (highest), and the calculation method varies from bureau to bureau.
When lenders evaluate your loan application, a process called underwriting, they try to evaluate your ability and willingness to repay your loan. They judge your ability to repay by looking at your income and how stable your past earnings have been. This helps them to determine if you can afford the loan payments. They judge your willingness to repay by looking at your past credit history. Generally speaking, someone who has made payments on time in the past will probably do so in the future. Lenders want their evaluation to be as accurate, objective and consistent as possible. To help achieve these goals, home mortgage lenders recently began using credit scores to help in the underwriting process. Credit scores are numerical values that rank individuals according to their credit history at a given point in time. Your score is based on your past payment history, the amount of credit you have outstanding, the amount of credit you have available, and other factors. According to Fannie Ma
A credit score is numeric snapshot, based on information in your credit file, of how likely you are to repay debts such as loans or lines of credit. Lenders use this number to determine not only whether to offer you credit, but to determine what interest rate you will pay. Credit scores also are designed to indicate your creditworthiness in comparison with other consumers. Generally, the higher your score, the more “creditworthy” you are to lenders.
A. A credit score is a credit score that attempts to condense a borrower’s credit history into a single number that will predict the likelihood that a person will pay their bills as agreed. Points are assigned for different pieces of information such as payment history, length of time of residency and employment, length of time credit has been established, use of credit and any negative information such as late payments, collections, bankruptcies and charge-offs. The score will range from 350 to 850, the higher the better. For mortgage loans, a score of 680 or above indicates a good score.
A credit score is a number calculated by the credit bureaus that help Lenders evaluate your loan application. The number is based on monthly data reported by your creditors about the balances you owe and the timings of your payments. Credit scores can range from 300-900.(900 being the best) Some of htings that affect your credit score include your payment history, your outstanding obligations, the length of time you have had outstanding credit, the types of credit you use, and the number inquires that have been made about your credit history.
