Your Credit Score: What it means

Before lenders make the decision to lend you money, they want to know if you're willing and able to repay that mortgage loan. To assess your ability to repay, lenders look at your debt-to-income ratio. In order to assess your willingness to repay the mortgage loan, they consult your credit score.

Fair Isaac and Company formulated the first FICO score to assess creditworthiness. You can learn more on FICO here.

Credit scores only assess the information contained in your credit reports. They don't take into account your income, savings, amount of down payment, or personal factors like sex ethnicity, national origin or marital status. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to consider only that which was relevant to a borrower's likelihood to pay back a loan.

Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score results from both positive and negative items in your credit report. Late payments count against your score, but a record of paying on time will improve it.

Your credit report must contain 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 payment history ensures that there is enough information in your report to build a score. If you don't meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.