A Score that Really Matters: The Credit Score
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Before they decide on the terms of your mortgage loan (which they base on their risk), lenders want to know two things about you: whether you can repay the loan, and how committed you are to pay back the loan. To assess your ability to pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.
Fair Isaac and Company formulated the first FICO score to assess creditworthiness. You can learn more on FICO here.
Credit scores only assess the information in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when FICO scores were invented as it is in the present day. Credit scoring was envisioned as a way to assess willingness to repay the loan without considering other personal factors.
Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scores. Your score reflects both the good and the bad in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.
Your report must have 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 enough information in your credit to calculate an accurate score. Some folks don't have a long enough credit history to get a credit score. They should spend some time building up credit history before they apply.