Before lenders decide to lend you money, they have to know that you're willing and able to pay back that loan. To figure out your ability to pay back the loan, they assess your debt-to-income 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. You can find out more about FICO here.
Credit scores only assess the info in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when FICO scores were first invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to pay without considering any other personal factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad in your credit history. Late payments count against you, but a record of paying on time will raise it.
Your credit 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 credit to calculate an accurate score. Should you not meet the minimum criteria for getting a credit score, you might need to establish your credit history prior to applying for a mortgage loan.
At Reliance Mortgage Service, Inc, we answer questions about Credit reports every day. Give us a call at 562 320-0510.