Before lenders make the decision to give you a loan, they must know that you are willing and able to repay that mortgage loan. To assess your ability to repay, they look at your debt-to-income ratio. In order to calculate your willingness to repay the mortgage loan, they look at your credit score.
Fair Isaac and Company developed the first FICO score to assess creditworthines. You can learn more on FICO here.
Your credit score comes from your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed to assess willingness to pay while specifically excluding other personal factors.
Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all considered in credit scoring. Your score reflects the good and the bad in your credit history. Late payments count against your score, but a consistent record of paying on time will raise it.
Your report must have at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This history ensures that there is sufficient information in your report to generate a score. Some folks don't have a long enough credit history to get a credit score. They should spend some time building up a credit history before they apply.
Foxfield Financial can answer questions about credit reports and many others. Call us at 720-598-8300.