Before lenders make the decision to give you a loan, they want to know if you are willing and able to repay that loan. To understand your ability to pay back the loan, 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 first FICO score to assess creditworthines. You can find out more on FICO here.
Credit scores only consider the information in your credit profile. They do not take into account 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. Credit scoring was envisioned as a way to consider only what was relevant to a borrower's likelihood to repay a loan.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score reflects the good and the bad in your credit report. Late payments count against your score, but a record of paying on time will improve it.
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 payment history ensures that there is sufficient information in your report to assign a score. Some folks don't have a long enough credit history to get a credit score. They may need to spend a little time building up a credit history before they apply.
Mutual Security Mortgage can answer questions about credit reports and many others. Call us: (303) 931-7879.