About Your Credit Score
Before lenders make the decision to lend you money, they must know that you are willing and able to repay that mortgage loan. To assess your ability to repay, they look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. You can learn more on FICO here.
Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as bad a word when FICO scores were first invented as it is in the present day. Credit scoring was developed as a way to take into account solely what was relevant to a borrower's likelihood to pay back the lender.
Deliquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scores. Your score is calculated from the good and the bad in your credit history. Late payments count against your score, but a consistent record of paying on time will improve it.
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 a score. If you don't meet the criteria for getting a score, you may need to work on your credit history prior to applying for a mortgage.
Price Mortgage Group LLC can answer your questions about credit reporting. Call us at 405-513-7700.