Before lenders decide to give you a loan, they must know if you're willing and able to repay that mortgage. To assess whether you can pay back the loan, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company calculated the first FICO score to help lenders assess creditworthines. We've written more about FICO here.
Credit scores only take into account the info in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as dirty a word when FICO scores were first invented as it is in the present day. Credit scoring was developed as a way to consider only what was relevant to a borrower's willingness to pay back a loan.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is calculated wtih positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will improve it.
To get a credit score, you must have an active credit account with a payment history of at least six months. This payment history ensures that there is sufficient information in your credit to calculate a score. Should you not meet the criteria for getting a score, you might need to work on your credit history prior to applying for a mortgage.
Harbor View Lending* a DBA of Megastar Financial can answer your questions about credit reporting. Call us at (207) 571-8034.