A Score that Really Matters: Your Credit Score
Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders need to know two things about you: your ability to pay back the loan, and your willingness to repay the loan. To figure out your ability to repay, lenders look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company developed the first FICO score to assess creditworthines. We've written a lot more about FICO here.
Credit scores only take into account the information in your credit profile. They do not consider income, savings, down payment amount, or factors like gender, ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when FICO scores were first invented as it is in the present day. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding any other demographic factors.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score reflects the good and the bad of your credit report. Late payments will lower your credit score, but consistently making future payments on time will improve your score.
To get a credit score, borrowers must have an active credit account with at least six months of payment history. This history ensures that there is enough information in your report to generate an accurate score. Some folks 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.