Before lenders make the decision to give you a loan, they need to know that you are willing and able to pay back that loan. To understand your ability to repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. We've written a lot more on FICO here.
Credit scores only consider the info in your credit reports. They don't take into account income, savings, amount of down payment, or factors like gender, 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 invented as it is today. Credit scoring was developed to assess willingness to pay without considering any other irrelevant factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score results from positive and negative items in your credit report. 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 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 payment history ensures that there is sufficient information in your report to build a score. Some borrowers 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.
Affinity Mortgage Brokers can answer your questions about credit reporting. Give us a call: 719-425-2226.