About Your Credit Score
Before lenders decide to give you a loan, they want to know if you are willing and able to pay back that loan. To understand whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. We've written a lot more about 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 these scores were first invented as it is in the present day. Credit scoring was developed to assess willingness to pay 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 is based on the good and the bad in your credit history. Late payments count against your score, but a 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 payment history ensures that there is enough information in your credit to generate a score. If you don't meet the criteria for getting a credit score, you might need to work on your credit history before you apply for a mortgage loan.
At U.S.A. Lending, Inc., we answer questions about Credit reports every day. Call us at 305-967-7200.