Before lenders decide to lend you money, they must know if you are willing and able to pay back that loan. To assess whether you can repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. You can find out more about FICO here.
Your credit score comes from your history of repayment. They don't consider income, savings, amount of down payment, or demographic factors like gender, ethnicity, nationality or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when FICO scores were first invented as it is today. Credit scoring was envisioned as a way to assess a borrower's willingness to repay the loan without considering other demographic factors.
Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all calculated into credit scoring. Your score is based on both the good and the bad in your credit history. Late payments lower your score, but consistently making future payments on time will raise your score.
Your report should 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 history ensures that there is sufficient information in your credit to generate an accurate score. Some people don't have a long enough credit history to get a credit score. They should build up credit history before they apply.
Churchill Mortgage Company can answer questions about credit reports and many others. Call us at (703) 551-4107.