About Your Credit Score

Before lenders make the decision to lend you money, they want to know if you are willing and able to pay back that mortgage loan. To understand whether you can pay back the loan, they look at your income and debt ratio. In order to assess your willingness to repay the loan, they consult your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. We've written a lot more about FICO here.

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were invented as it is now. Credit scoring was invented as a way to consider only that which was relevant to a borrower's willingness to repay the lender.

Deliquencies, 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 comes from both the good and the bad 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 improve your score.

For the agencies to calculate 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 generate a score. Some people don't have a long enough credit history to get a credit score. They should spend some time building up a credit history before they apply for a loan.

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