Credit Scoring

Before lenders decide to lend you money, they want to know if you are willing and able to repay that mortgage loan. To figure out your ability to repay, lenders look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.

Your credit score is a result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were first invented as it is today. Credit scoring was invented as a way to consider solely that which was relevant to a borrower's likelihood to repay a loan.

Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scoring. Your score considers positive and negative information in your credit report. Late payments count against you, but a record of paying on time will raise it.

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 history ensures that there is enough information in your credit to assign a score. Should you not meet the criteria for getting a score, you might need to work on your credit history before you apply for a mortgage.

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