Before lenders make the decision to lend you money, they must know that you're willing and able to pay back that mortgage loan. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Credit scores only consider the information contained in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering any other personal factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score results from both positive and negative information in your credit report. Late payments lower your score, but consistently making future payments on time will raise 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 history ensures that there is sufficient information in your report to build an accurate score. Should you not meet the criteria for getting a score, you may need to work on a credit history before you apply for a mortgage loan.
Savers Home Loans can answer your questions about credit reporting. Give us a call: (800) 974-0509.