A Score that Really Matters: Your Credit Score

Before lenders decide to lend you money, they have to know if you're willing and able to repay that loan. To understand your ability to repay, they assess 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 assess creditworthines. You can learn more about FICO here.

Credit scores only take into account the info contained 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 consider solely what was relevant to a borrower's willingness to pay back the lender.

Deliquencies, payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all calculated into credit scores. Your score considers positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will improve it.

Your report should 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 credit to build an accurate score. Some folks don't have a long enough credit history to get a credit score. They should spend some time building a credit history before they apply.

At Harbor View Lending* a DBA of Megastar Financial, we answer questions about Credit reports every day. Give us a call at (207) 571-8034.