About Your Credit Score
Before lenders decide to lend you money, they have to know that you are willing and able to pay back that loan. To understand your ability to pay back the loan, they assess your income and debt ratio. To calculate your willingness to pay back the mortgage loan, they consult your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written a lot more on FICO here.
Your credit score comes from your repayment history. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess willingness to repay the loan without considering any other irrelevant factors.
Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score is calculated from both the good and the bad in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.
To get a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is enough information in your report to generate a score. If you don't meet the minimum criteria for getting a score, you may need to work on a credit history prior to applying for a mortgage.
Blue Door Mortgage can answer your questions about credit reporting. Give us a call: (617) 527-BLUE(2583).