A Score that Really Matters: The Credit Score

Before lenders make the decision to lend you money, they must know that you're willing and able to repay that loan. To assess your ability to pay back the loan, lenders look at your debt-to-income ratio. In order to calculate your willingness to pay back the mortgage loan, they consult your credit score.

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

Credit scores only consider the information contained in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were invented as it is now. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering any other demographic factors.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated wtih positive and negative information in your credit report. Late payments will lower your score, but consistently making future payments on time will improve your score.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This payment history ensures that there is enough information in your credit to generate a score. If you don't meet the criteria for getting a credit score, you may need to establish a credit history before you apply for a mortgage.

At Metro Mortgage, we answer questions about Credit reports every day. Give us a call: 866-300-1550.