Your Credit Score: What it means
Before lenders decide to lend you money, they need to know if you are willing and able to pay back that loan. To understand whether you can pay back the loan, they look at your income and debt ratio. To calculate your willingness to repay the loan, they look at your credit score.
Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Credit scores only assess the info in your credit profile. They don't consider income, savings, amount of down payment, or factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider only what was relevant to a borrower's willingness to repay the lender.
Your current debt load, 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 lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
Your credit report should have 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 enough information in your report to generate a score. If you don't meet the criteria for getting a credit score, you might need to work on your credit history before you apply for a mortgage loan.
At Mutual Security Mortgage, we answer questions about Credit reports every day. Give us a call at (303) 931-7879.