A Score that Really Matters: The Credit Score
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Before lenders make the decision to lend you money, they need to know if you're willing and able to repay that mortgage. To figure out your ability to pay back the loan, they assess your debt-to-income ratio. To calculate your willingness to pay back the loan, they consult your credit score.
Fair Isaac and Company built the first FICO score to help lenders assess creditworthiness. For details on FICO, read more here.
Your credit score is a result of your repayment history. They don't consider your income, savings, down payment amount, or personal factors like sex ethnicity, national origin 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 today. Credit scoring was developed to assess willingness to repay the loan while specifically excluding other personal factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative information in your credit report. Late payments count against you, but a consistent record of paying on time will raise it.
For the agencies to calculate a credit score, borrowers must have an active credit account with six months of payment history. This payment history ensures that there is enough information in your report to calculate a score. If you don't meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.