Credit Scores

Before lenders make the decision to lend you money, they need to know if you're willing and able to pay back that mortgage. To assess your ability to pay back the loan, they look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

The most widely used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. Your FICO score ranges from 350 (very high risk) to 850 (low risk). For details on FICO, read more here.

Your credit score comes from your history of repayment. They do not consider income, savings, down payment amount, or personal factors like sex race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when FICO scores were invented as it is today. Credit scoring was developed to assess a borrower's willingness to pay without considering other personal factors.

Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative items in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.

To get a credit score, borrowers must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your report to calculate an accurate score. Should you not meet the criteria for getting a credit score, you may need to establish a credit history prior to applying for a mortgage loan.

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