About Your Credit Score
Before deciding on what terms they will offer you a mortgage loan, lenders want to find out two things about you: whether you can pay back the loan, and your willingness to pay back the loan. To assess your ability to repay, they look at your debt-to-income ratio. In order to calculate your willingness to repay the loan, they look at your credit score.
Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Credit scores only assess the info in your credit profile. They never take into account income, savings, down payment amount, or factors like gender, race, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to pay while specifically excluding any other personal factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score comes from both the good and the bad of your credit history. Late payments count against your score, but a record of paying on time will improve 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 sufficient information in your credit to calculate an accurate score. If you don't meet the minimum criteria for getting a credit score, you may need to establish a credit history before you apply for a mortgage.
Metro Mortgage can answer questions about credit reports and many others. Call us: 866-300-1550.