About Your Credit Score
Before lenders make the decision to give you a loan, they need to know if you are willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, lenders look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. We've written a lot more on FICO here.
Your credit score comes from your repayment history. They don't consider income, savings, amount of down payment, or factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when these scores were first invented as it is in the present day. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's willingness to repay the lender.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score results from positive and negative items in your credit report. Late payments count against you, but a 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 enough information in your report to build a score. Some folks don't have a long enough credit history to get a credit score. They should spend some time building credit history before they apply.
At U.S.A. Lending, Inc., we answer questions about Credit reports every day. Call us at 305-967-7200.