Your Credit Score: What it means

Before lenders make the decision to give you a loan, they need to know that you're willing and able to pay back that mortgage loan. To understand your ability to repay, they assess your income and debt ratio. To assess your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. We've written more on FICO here.

Credit scores only consider the info contained in your credit profile. They don't consider your income, savings, amount of down payment, or personal factors like sex ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were first invented as it is today. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated wtih both positive and negative items in your credit report. Late payments count against you, but a record of paying on time will improve it.

Your credit 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 sufficient information in your report to calculate a score. Some folks don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply.

At America's Money Source, we answer questions about Credit reports every day. Give us a call: 4078987559.