Credit Scores

Before they decide on the terms of your loan (which they base on their risk), lenders must discover two things about you: whether you can pay back the loan, and how committed you are to pay back the loan. To figure out your ability to repay, lenders assess your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company calculated the first FICO score to assess creditworthines. You can find out more about FICO here.

Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider solely what was relevant to a borrower's willingness to repay the lender.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scoring. Your score reflects both the good and the bad 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 at least six months of payment history. This payment history ensures that there is enough information in your report to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend a little time building up credit history before they apply.

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