Your Credit Score: What it means

Before lenders make the decision to lend you money, they want to know if you are willing and able to pay back that mortgage. To assess your ability to repay, lenders look at your debt-to-income ratio. To assess your willingness to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to assess creditworthines. For details on FICO, read more here.

Credit scores only take into account the information contained in your credit profile. 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 today. Credit scoring was envisioned as a way to take into account only that which was relevant to a borrower's likelihood to repay the lender.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scores. Your score comes from the good and the bad of your credit report. Late payments count against your score, but a record of paying on time will raise it.

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 enough information in your report to generate a score. If you don't meet the criteria for getting a score, you may need to establish your credit history prior to applying for a mortgage.

At Not Your Average Lender, we answer questions about Credit reports every day. Call us at 9722039033.