Before lenders decide to give you a loan, they need to know if you are willing and able to pay back that mortgage. To understand your ability to repay, they assess your income and debt ratio. In order to calculate your willingness to pay back the mortgage loan, they consult your credit score.
Fair Isaac and Company formulated the original FICO score to assess creditworthines. You can find out more on FICO here.
Credit scores only consider the information contained in your credit profile. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding other demographic factors.
Deliquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scores. Your score comes from the good and the bad of your credit history. Late payments lower your score, but consistently making future payments on time will improve your score.
For the agencies to calculate a credit score, borrowers must have an active credit account with six months of payment history. This history ensures that there is enough information in your credit to assign an accurate score. If you don't meet the criteria for getting a credit score, you might need to work on a credit history prior to applying for a mortgage.
At Omni Mortgage Corp., we answer questions about Credit reports every day. Call us: 718-441-7000.