Your Credit Score: What it means

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Before lenders make the decision to give you a loan, they must know that you are willing and able to repay that loan. To assess your ability to pay back the loan, they assess your debt-to-income 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 creditworthiness. You can learn more on FICO here.

Credit scores only consider the information contained in your credit reports. They don't take into account income, savings, down payment amount, or factors like gender, ethnicity, national origin or marital status. 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 assess willingness to pay without considering any other irrelevant factors.

Past delinquencies, payment behavior, debt level, length of credit history, types of credit and number of inquiries are all calculated into credit scores. Your score considers both positive and negative information in your credit report. Late payments lower your score, but consistently making future payments on time will raise your score.

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

TriStone Financial LLC can answer your questions about credit reporting. Give us a call at (678) 336-5200.