Before lenders decide to give you a loan, they want to know that you're willing and able to pay back that loan. To understand your ability to repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company developed the first FICO score to help lenders assess creditworthines. We've written a lot more on FICO here.
Credit scores only take into account the info in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when FICO scores were first invented as it is now. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's willingness to repay a loan.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score results from positive and negative items in your credit report. Late payments will lower your score, but consistently making future payments on time will raise your score.
For the agencies to calculate a credit score, you 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. If you don't meet the criteria for getting a credit score, you might need to work on your credit history prior to applying for a mortgage loan.
At Foxfield Financial, we answer questions about Credit reports every day. Call us: 720-598-8300.