Before lenders decide to lend you money, they must know if you are willing and able to pay back that mortgage loan. To understand your ability to pay back the loan, they look at your income and debt ratio. In order to assess your willingness to repay the mortgage loan, they consult your credit score.
Fair Isaac and Company calculated the first FICO score to assess creditworthines. We've written a lot more on FICO here.
Credit scores only consider the information in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is today. Credit scoring was developed as a way to take into account solely what was relevant to a borrower's likelihood to repay a loan.
Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score comes from the good and the bad in your credit history. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.
To get a credit score, borrowers must have an active credit account with six months of payment history. This history ensures that there is sufficient information in your report to build an accurate score. If you don't meet the criteria for getting a score, you might need to establish your credit history prior to applying for a mortgage.
Rasmussen Mortgage can answer your questions about credit reporting. Give us a call: 608-592-5600.