About Your Credit Score
Before lenders make the decision to lend you money, they want to know that you are willing and able to pay back that loan. To understand whether you can repay, they look at your income and debt ratio. To assess your willingness to repay, they use your credit score.
Fair Isaac and Company formulated the first FICO score to assess creditworthines. For details on FICO, read more here.
Your credit score comes from your repayment history. They don't take into account your income, savings, amount of down payment, or factors like sex race, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. Credit scoring was developed to assess willingness to repay the loan without considering other irrelevant factors.
Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scores. Your score results from positive and negative information in your credit report. Late payments will lower your score, but consistently making future payments on time will raise your score.
To get a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is enough information in your credit to assign an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They should build up a credit history before they apply for a loan.
At Tenby J. Dahman, we answer questions about Credit reports every day. Give us a call at (303) 862-7760.