Before deciding on what terms they will offer you a loan, lenders must discover two things about you: your ability to pay back the loan, and if you are willing to pay it back. To understand 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 look at your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written a lot more about FICO here.
Your credit score is a result of your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider only that which was relevant to a borrower's likelihood to repay the lender.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score comes from both the good and the bad in 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 payment history ensures that there is sufficient information in your report to build an accurate score. Should you not meet the minimum criteria for getting a score, you might need to establish a credit history before you apply for a mortgage.
First Southeast Mortgage Corporation can answer questions about credit reports and many others. Give us a call at 954.920.9799.