Your Credit Score: What it means
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Before they decide on the terms of your loan (which they base on their risk), lenders want to know two things about you: your ability to pay back the loan, and if you will pay it back. To understand your ability to repay, they look at 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 help lenders assess creditworthiness. You can find out more on FICO here.
Your credit score is a direct result of your history of repayment. They don't consider income or personal characteristics. Fair Isaac invented FICO specifically to exclude demographic factors like these. "Profiling" was as dirty a word when these scores were invented as it is today. Credit scoring was developed as a way to consider solely what was relevant to a borrower's likelihood to pay back a loan.
Past delinquencies, payment behavior, current debt level, length of credit history, types of credit and number of credit inquiries are all considered in credit scores. Your score comes from the good and the bad in your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.
To get a credit score, borrowers 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 folks don't have a long enough credit history to get a credit score. They should spend a little time building a credit history before they apply for a loan.