A Score that Really Matters: Your Credit Score
Before deciding on what terms they will offer you a mortgage loan, lenders need to discover two things about you: your ability to pay back the loan, and your willingness to pay back the loan. To understand your ability to pay back the loan, they assess your income and debt ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. For details on FICO, read more here.
Credit scores only take into account the info in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was envisioned as a way to take into account only that which was relevant to a borrower's likelihood to repay a loan.
Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated from both the good and the bad of your credit report. Late payments count against you, but a consistent record of paying on time will improve it.
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 payment history ensures that there is sufficient information in your report to assign an accurate score. If you don't meet the criteria for getting a credit score, you might need to establish a credit history before you apply for a mortgage.