Credit Scoring, How is it Done? What Can You do About it?Credit scoring, learn how it's done and what you can do to help improve your score. The most widely used are FICO scores, which were developed by Fair Isaac & Company, Inc. for each of the credit reporting agencies/bureaus. 
The scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount or other factors like gender, race, nationality or marital status.
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. To raise your score establishing or reestablishing a good track record of making payments on time. Different portions of your credit file are given different weights. They are: Paying your bills on time is the most important factor for a good credit score. Even if the bills you owe are a small amount, it is crucial that you make these payments on time. In addition, you may want to keep balances low on credit cards and other "revolving credit.” Apply for and open new credit accounts only as needed. Pay off bills rather than moving the debt around. Don't close unused cards as a short term strategy to raise your score. This may actually lower your score. Owing the same amount but having fewer open accounts can lower your score. Recent changes minimize the negative effects that rate shopping can have on a mortgage applicant. For example, if there is an inquiry originated by a consumer within the past 365 days from a mortgage or car loan, these inquiries are not considered for scoring purposes for the first 30 calendar days. Then, multiple inquiries within the next 14 days are counted as one. Each inquiry will still appear on the credit report. Every score is accompanied by a maximum of four reason codes. Reason codes identify the most significant reason that you did not score higher. These codes can help a lender describe the reasons for a higher than expected rate or loan denial. Scores are not part of the /bureaus. Credit scores only consider the information contained in your credit profile and are not covered by the Fair Credit Reporting Act Your credit report must contain at least one account which has been open for six months or greater, 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. Perhaps you do not meet the minimum criteria for getting a score. Then you may need to establish a credit history before applying for a mortgage. If you would like to leave Credit Scoring, How is it Done? and return to our First Time Home Buyer Credit main page, click here. Or return to First Time Home Buyers home page.
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