• About Your Credit Score

    Before deciding on what terms they will offer you a loan (which they base on their risk), lenders need to know two things about you: your ability to repay the loan, and if you will pay it back. To understand your ability to pay back the loan, they look at your income and debt ratio. To assess your willingness to repay the loan, they consult your credit score.

    Fair Isaac and Company formulated the first FICO score to assess creditworthiness. For details on FICO, read more here.

    Your credit score comes from your history of repayment. They never consider income, savings, amount of down payment, or factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors like these. Credit scoring was developed to assess a borrower's willingness to pay while specifically excluding other demographic factors.

    Your current debt level, past late payments, length of your credit history, and a few other factors are considered. Your score is calculated with both positive and negative information in your credit report. Late payments count against your score, but a record of paying on time will raise it.

    Your credit report must 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 enough information in your report to generate a score. Some folks 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 for a loan.