About Your Credit Score

Before lenders make the decision to lend you money, they must know if you're willing and able to pay back that loan. To assess 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 calculated the original FICO score to assess creditworthines. We've written a lot more on FICO here.

Your credit score comes from your history of repayment. They never take into account income, savings, amount of down payment, or factors like sex ethnicity, nationality or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was invented as a way to consider solely what was relevant to a borrower's willingness to repay a loan.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and the number of credit inquiries are all considered in credit scoring. Your score is calculated wtih positive and negative information in your credit report. Late payments will lower your score, but consistently making future payments on time will improve your score.

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 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 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.