Before lenders make the decision to give you a loan, they need to know if you're willing and able to pay back that mortgage loan. To assess your ability to pay back the loan, they assess your debt-to-income ratio. To calculate your willingness to pay back the loan, they consult your credit score.
The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (very high risk) to 850 (low risk). We've written a lot more about FICO here.
Credit scores only assess the information contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering other personal factors.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.
Your report must contain 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 build a score. Should you not meet the criteria for getting a credit score, you might need to work on a credit history prior to applying for a mortgage loan.
U.S.A. Lending, Inc. can answer your questions about credit reporting. Give us a call: 305-967-7200.