About Your Credit Score

Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders want to know two things about you: whether you can pay back the loan, and your willingness to repay the loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. You can learn more on FICO here.

Credit scores only consider the information contained in your credit profile. They don't consider income, savings, amount of down payment, or personal factors like sex race, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other demographic factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative items in your credit report. Late payments will lower your credit score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your report should 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 history ensures that there is enough information in your credit to build a score. Should you not meet the minimum criteria for getting a score, you may need to work on your credit history before you apply for a mortgage loan.

Metro Mortgage can answer your questions about credit reporting. Call us: 866-300-1550.