A Score that Really Matters: Your Credit Score

Before they decide on the terms of your loan, lenders want to know two things about you: whether you can repay the loan, and your willingness to repay the loan. To understand your ability to repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company developed the original FICO score to help lenders assess creditworthines. You can find out more about FICO here.

Credit scores only assess the info in your credit reports. They don't consider your income, savings, down payment amount, or demographic factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was invented as a way to consider only what was relevant to a borrower's likelihood to pay back the lender.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score is based on both the good and the bad of your credit report. Late payments count against your score, but a 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 credit to calculate an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend a little time building credit history before they apply.

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