Your Credit Score: What it means
Before lenders decide to give you a loan, they need to know if you are willing and able to pay back that mortgage. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.
Fair Isaac and Company built the original FICO score to assess creditworthines. We've written a lot more on FICO here.
Credit scores only consider the info in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering other personal factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is based on the good and the bad of your credit history. Late payments lower your credit score, but establishing or reestablishing a good track record of making payments on time will improve your score.
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 payment history ensures that there is enough information in your credit to assign a score. If you don't meet the minimum criteria for getting a credit score, you may need to establish your credit history prior to applying for a mortgage.
At Reliance Mortgage Service, Inc, we answer questions about Credit reports every day. Call us: 5623200510.