Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders want to find out two things about you: whether you can repay the loan, and if you will pay it back. To assess your ability to repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company developed the first 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 never take into account your income, savings, amount of down payment, or personal factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to pay while specifically excluding any other irrelevant factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score results from both positive and negative items in your credit report. Late payments count against you, but a record of paying on time will improve it.
To get a credit score, borrowers must have an active credit account with six months of payment history. This history ensures that there is sufficient information in your report to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend some time building a credit history before they apply.
First Community Bank of Central Al. can answer your questions about credit reporting. Call us at (334) 285-8850.