Your Credit Score: What it means

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Before deciding on what terms they will offer you a mortgage loan (which they base on their risk), lenders must discover two things about you: whether you can repay the loan, and if you are willing to pay it back. 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 first FICO score to assess creditworthiness. We've written a lot more on FICO here.

Your credit score is a result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess a borrower's willingness to repay the loan without considering other irrelevant factors.

Your current debt load, past late payments, length of your credit history, and a few other factors are considered. Your score is based on both the good and the bad of your credit report. Late payments will lower your score, but consistently making future payments on time will improve your score.

To get a credit score, borrowers must have an active credit account with a payment history of at least six months. This payment history ensures that there is enough information in your credit to assign a score. Should you not meet the criteria for getting a score, you may need to work on your credit history before you apply for a mortgage.

At The Rosenbaum Lending Group, we answer questions about Credit reports every day. Call us: 703-871-1329.