About Your Credit Score
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Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders must find out two things about you: your ability to pay back the loan, and if you will pay it back. To understand whether you can repay, they assess your income and debt ratio. To assess how willing you are to repay, they use your credit score.
The most commonly used credit scores are FICO scores, which Fair Isaac & Company, a financial analytics agency, developed. The FICO score ranges from 350 (very high risk) to 850 (low risk). We've written more about FICO here.
Credit scores only consider the info in your credit profile. They never take into account your income, savings, amount of down payment, or factors like sex ethnicity, 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 repay the loan while specifically excluding other irrelevant factors.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score is based on the good and the bad of your credit history. Late payments count against your score, 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 payment history ensures that there is sufficient information in your credit to calculate a score. Should you not meet the criteria for getting a credit score, you may need to work on a credit history before you apply for a mortgage loan.