Before lenders make the decision to lend you money, they want to know if you're willing and able to pay back that mortgage loan. To assess your ability to pay back the loan, they look at your income and debt ratio. In order to assess your willingness to repay the loan, they look at your credit score.
Fair Isaac and Company developed the first FICO score to assess creditworthines. For details on FICO, read more 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 bad a word when these scores were first invented as it is now. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding any other irrelevant factors.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers both positive and negative information in your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.
Your report should 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 payment history ensures that there is enough information in your report to calculate a score. Some borrowers don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply.
At Savers Home Loans, we answer questions about Credit reports every day. Give us a call: (800) 974-0509.