Before deciding on what terms they will offer you a loan (which they base on their risk), lenders want to know two things about you: whether you can repay the loan, and if you are willing to pay it back. To assess your ability to pay back the loan, they look at your income and debt ratio. In order to assess your willingness to pay back the loan, they consult your credit score.
Fair Isaac and Company formulated the first FICO score to help lenders assess creditworthines. We've written more on FICO here.
Credit scores only consider 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 envisioned as a way to take into account solely that which was relevant to a borrower's willingness to pay back the lender.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad of your credit report. Late payments will lower your credit score, but consistently making future payments on time will raise your score.
Your 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 history ensures that there is sufficient information in your report to assign a score. Some borrowers don't have a long enough credit history to get a credit score. They may need to spend a little time building up credit history before they apply.
Nationwide Home Loans can answer questions about credit reports and many others. Give us a call: 5626935048.