Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders must discover two things about you: whether you can repay the loan, and how committed you are to pay back the loan. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. In order to calculate your willingness to repay the loan, they consult your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can learn more about FICO here.
Your credit score comes from your history of repayment. They never consider income, savings, down payment amount, or factors like sex race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is now. Credit scoring was envisioned as a way to consider solely what was relevant to a borrower's willingness to repay a loan.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated wtih positive and negative information in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.
To get a credit score, you must have an active credit account with a payment history of six months. This history ensures that there is sufficient 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 a little time building up a credit history before they apply for a loan.
Price Mortgage Group LLC can answer your questions about credit reporting. Give us a call at 405-513-7700.