Your Credit Score: What it means

Before lenders make the decision to lend you money, they have to know if you are willing and able to pay back that mortgage loan. To assess your ability to repay, they look at your income and debt ratio. To calculate your willingness to repay the loan, they consult your credit score.

Fair Isaac and Company calculated the first FICO score to assess creditworthines. You can learn more about FICO here.

Credit scores only consider the information contained in your credit reports. 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 invented as it is today. Credit scoring was invented as a way to take into account only that which was relevant to a borrower's willingness to repay a loan.

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

Your 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 history ensures that there is sufficient information in your report to calculate a score. Some people 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.

U.S.A. Lending, Inc. can answer your questions about credit reporting. Give us a call: 305-967-7200.