Your Credit Score: What it means
Before lenders make the decision to give you a loan, 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 look at your income and debt ratio. In order to calculate your willingness to repay the loan, they consult your credit score.
Fair Isaac and Company calculated the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Your credit score comes from your repayment history. They do not consider your income, savings, amount of down payment, or factors like sex race, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when these scores were first invented as it is today. 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.
Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and the number of credit inquiries are all calculated into credit scores. Your score is calculated from the good and the bad in your credit history. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
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 history ensures that there is sufficient information in your report to assign an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply for a loan.