Before lenders make the decision to lend you money, they have to know if you are willing and able to repay that mortgage loan. To assess whether you can repay, they assess 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 assess creditworthines. You can find out more about FICO here.
Your credit score is a direct result of your repayment history. They never consider your income, savings, amount of down payment, or factors like gender, ethnicity, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when these scores were first invented as it is today. Credit scoring was developed to assess willingness to repay the loan without considering any other irrelevant factors.
Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score is calculated wtih positive and negative items in your credit report. Late payments count against your score, but a record of paying on time will improve it.
Your report should 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 enough information in your credit to calculate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply.
At Price Mortgage Group LLC, we answer questions about Credit reports every day. Give us a call: 405-513-7700.