Your Credit Score: What it means

Before lenders decide to give you a loan, they need to know that you are willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they look at your income and debt ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company built the original FICO score to help lenders assess creditworthines. We've written more on FICO here.

Your credit score comes from your repayment history. They don't consider income or personal characteristics. These scores were invented specifically for this reason. "Profiling" was as bad a word when these scores were first invented as it is now. Credit scoring was invented as a way to consider solely what was relevant to a borrower's willingness to pay back the lender.

Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all calculated into credit scoring. Your score reflects the good and the bad of your credit history. Late payments lower your credit score, but consistently making future payments on time will raise your score.

To get a credit score, you must have an active credit account with a payment history of six months. This payment history ensures that there is sufficient information in your credit to build an accurate score. Some borrowers don't have a long enough credit history to get a credit score. They may need to build up credit history before they apply for a loan.

Not Your Average Lender can answer questions about credit reports and many others. Call us: 9722039033.