Before lenders decide to lend you money, they want to know if you are willing and able to pay back that mortgage loan. To assess whether you can pay back the loan, they assess your income and debt ratio. To assess your willingness to pay back the loan, they look at your credit score.
Fair Isaac and Company calculated the original FICO score to assess creditworthines. For details on FICO, read more here.
Your credit score comes from your history of repayment. 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 now. Credit scoring was invented as a way to consider only that which was relevant to a borrower's willingness to pay back a loan.
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 information in your credit report. Late payments count against your score, but a consistent record of paying on time will improve it.
To get a credit score, borrowers must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your report to calculate a score. Some folks don't have a long enough credit history to get a credit score. They may need to spend some time building a credit history before they apply.
Bright Vision Mortgage can answer questions about credit reports and many others. Call us: (904) 342-3622.