Your Credit Score: What it means

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

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

Credit scores only take into account the information in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was developed as a way to consider only what was relevant to a borrower's willingness to pay back a loan.

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

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