Your Credit Score: What it means

Before lenders make the decision to give you a loan, they need to know that you are willing and able to repay that loan. To assess your ability to repay, lenders look at your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.

Fair Isaac and Company built the first FICO score to help lenders assess creditworthines. For details on FICO, read more here.

Credit scores only consider the info in your credit reports. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as bad a word when FICO scores were first invented as it is in the present day. Credit scoring was envisioned as a way to take into account solely that which was relevant to a borrower's willingness to repay a loan.

Deliquencies, 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 comes from the good and the bad of your credit report. Late payments will lower your score, but consistently making future payments on time will improve your score.

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

The Rate Kings Mortgage LLC can answer questions about credit reports and many others. Give us a call at 8009468194.