Before lenders make the decision to lend you money, they need to know that you're willing and able to pay back that mortgage. To figure out your ability to repay, they assess your debt-to-income 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 more on FICO here.
Credit scores only assess the info contained in your credit profile. They never take into account income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was developed to assess a borrower's willingness to pay without considering other personal factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated wtih positive and negative information in your credit report. Late payments lower your credit score, but consistently making future payments on time will raise your score.
To get a credit score, borrowers must have an active credit account with a payment history of at least six months. This payment history ensures that there is sufficient information in your credit to calculate a score. Some borrowers don't have a long enough credit history to get a credit score. They may need to build up a credit history before they apply for a loan.
Custom Lending Group can answer your questions about credit reporting. Call us: (707) 252-2700.