Your Credit Score: What it means
Before lenders decide to lend you money, they need to know that you are willing and able to repay that loan. To assess your ability to pay back the loan, they assess your income and debt ratio. In order to assess your willingness to pay back the loan, they look at your credit score.
The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). You can find out more on FICO here.
Credit scores only assess the information contained in your credit profile. They don't consider income, savings, amount of down payment, or demographic factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were invented as it is today. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other personal factors.
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 is calculated from the good and the bad in your credit report. Late payments count against you, but a consistent record of paying on time will improve it.
Your report must 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 sufficient information in your credit to build an accurate score. Should you not meet the criteria for getting a credit score, you might need to work on a credit history prior to applying for a mortgage.