How do I improve my FICO score?

Before lenders decide to give you a loan, they must know if you’re willing and able to repay that mortgage. To assess your ability to repay, lenders assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company developed the first FICO score to help lenders assess creditworthiness. You can find out more on FICO here.

Credit scores only take into account the info in your credit profile. They never consider your income, savings, down payment amount, or personal factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess a borrower’s willingness to pay while specifically excluding other demographic factors.

Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scoring. Your score comes from the good and the bad of your credit report. Late payments count against your score, but a record of paying on time will raise it.

Your credit report must 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 payment history ensures that there is sufficient information in your credit to calculate an accurate score. If you don’t meet the minimum criteria for getting a score, you might need to establish your credit history before you apply for a mortgage loan.