About Your Credit Score

Before deciding on what terms they will offer you a loan, lenders want to know two things about you: your ability to repay the loan, and how committed you are to pay back the loan. To understand whether you can pay back the loan, they assess your income and debt ratio. To calculate your willingness to pay back the loan, they look at your credit score.

Fair Isaac and Company formulated the original FICO score to help lenders assess creditworthines. You can find out more about FICO here.

Your credit score comes from your repayment history. They do not take into account income, savings, down payment amount, or demographic factors like sex race, national origin or marital status. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is today. Credit scoring was developed to assess a borrower's willingness to repay the loan while specifically excluding any other demographic factors.

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

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 history ensures that there is enough information in your report to calculate an accurate score. Some people don't have a long enough credit history to get a credit score. They should spend some time building credit history before they apply.

Tenby J. Dahman can answer your questions about credit reporting. Give us a call at 3038627760.