Before deciding on what terms they will offer you a mortgage loan, lenders want to know two things about you: your ability to pay back the loan, and how committed you are to repay the loan. To understand your ability to pay back the loan, they look at 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 calculated the original FICO score to assess creditworthines. For details on FICO, read more here.
Credit scores only assess the info in your credit profile. They don't consider income, savings, down payment amount, or factors like sex ethnicity, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is in the present day. Credit scoring was envisioned as a way to consider solely 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 is calculated from the good and the bad of your credit history. Late payments count against you, but a consistent record of paying on time will raise it.
Your credit 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 history ensures that there is sufficient information in your report to assign an accurate score. Should you not meet the criteria for getting a credit score, you may need to work on a credit history before you apply for a mortgage.
Bright Vision Mortgage can answer your questions about credit reporting. Give us a call: (904) 342-3622.