Credit Scores

Before lenders decide to give you a loan, they need to know if you are willing and able to pay back that mortgage. To figure out your ability to pay back the loan, they look at your debt-to-income ratio. In order to calculate your willingness to pay back the loan, they consult your credit score.

Fair Isaac and Company developed the first FICO score to assess creditworthines. You can learn more about FICO here.

Credit scores only take into account the info contained in your credit profile. They never consider income, savings, amount of down payment, or factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to take into account only that which was relevant to a borrower's likelihood to repay the lender.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is based on the good and the bad of your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your credit report should 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 history ensures that there is enough information in your credit to build an accurate score. Some borrowers 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 for a loan.

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