A Score that Really Matters: Your Credit Score

Before lenders make the decision to give you a loan, they need to know that you're willing and able to repay that mortgage loan. To understand your ability to repay, they assess your income and debt ratio. In order to calculate your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company calculated the original FICO score to assess creditworthines. For details on FICO, read more here.

Your credit score is a direct result of your repayment history. They don't consider income, savings, amount of down payment, or demographic factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess willingness to pay while specifically excluding any other demographic factors.

Past delinquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scores. Your score results from positive and negative items in your credit report. Late payments count against you, 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 enough information in your credit to generate an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building up credit history before they apply.

Metro Mortgage can answer questions about credit reports and many others. Give us a call: 866-300-1550.