Before lenders make the decision to give you a loan, they want to know that you're willing and able to repay that mortgage loan. To understand your ability to repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.
Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed as a way to consider only what was relevant to a borrower's willingness to repay a loan.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.
For the agencies to calculate a credit score, you must have an active credit account with a payment history of six months. This history ensures that there is sufficient information in your credit to assign an accurate score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building a credit history before they apply for a loan.
America's Money Source can answer questions about credit reports and many others. Give us a call at 4078987559.