About Your Credit Score
Before lenders make the decision to lend you money, they must know if you're willing and able to repay that mortgage loan. To assess your ability to pay back the loan, they assess your income and debt ratio. To calculate 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. You can learn more about FICO here.
Your credit score comes from your repayment history. They never consider income, savings, amount of down payment, or demographic factors like sex race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were first invented as it is now. Credit scoring was envisioned as a way to take into account solely that which was relevant to a borrower's likelihood to repay a loan.
Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all considered in credit scores. Your score is calculated from the good and the bad of your credit report. Late payments count against you, 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 generate a score. Some people don't have a long enough credit history to get a credit score. They may need to spend a little time building up credit history before they apply for a loan.
America's Home Loans can answer questions about credit reports and many others. Give us a call at 701.222.0100.