Before deciding on what terms lenders will offer you on a loan (which they base on the "risk" to them), they want to know two things about you: what is your ability to pay back the loan, and what is your willingness to pay back the loan. For the first, they look at your debt-to-income ratio(DTI). For your willingness to pay back the loan, they consult your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk). Don't feel that because you may have a lower score that you may not be able to get a loan. We have many programs for all credit grades. We have programs that go in to the 500's. The average credit score is around 680.

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score. Your credit report also may be missing current information which might increase your score. For this very reason we will do a review of your credit with you so that we can be sure your application contains the most accurate report possible.

Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested. It is in your best interest not to apply for credit if you dont need it. Try not to have your credit pulled more than four times in a two year period. Loans and insurance are exceptions to to this rule. All inquires to your credit with loans and insurance will count as one inquiry as long as they are done in the same two week period.

Your credit report must contain 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 ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may in some cases need to establish a credit history prior to applying for a mortgage.

You do not need to have a score to get a mortgage, but it can be helpful if you had some past credit problems. The type of mortgage you are applying for can also be an important factor with regards to your credit.

Let us help you get the mortgage you deserve!