Before deciding on what terms they will offer you a loan (which they base on their risk), lenders must know two things about you: your ability to repay the loan, and if you are willing to pay it back. To understand whether you can repay, they assess your income and debt ratio. In order to assess your willingness to pay back the mortgage loan, they consult your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written a lot more on FICO here.
Credit scores only consider the information in your credit reports. They don't take into account your income, savings, down payment amount, or factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when these scores were invented as it is today. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering any other demographic factors.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score considers both positive and negative information in your credit report. Late payments lower your credit score, but consistently making future payments on time will improve your score.
Your 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 payment history ensures that there is sufficient information in your credit to assign an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should build up a credit history before they apply for a loan.
Mutual Security Mortgage can answer questions about credit reports and many others. Give us a call: (303) 931-7879.