About Your Credit Score

Before deciding on what terms they will offer you a loan, lenders must find out two things about you: your ability to pay back the loan, and if you will pay it back. To understand whether you can repay, they assess your income and debt ratio. To assess your willingness to repay, they use your credit score.

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

Your credit score is a direct result of your history of repayment. They never consider income, savings, down payment amount, or demographic factors like sex race, nationality or marital status. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider only what was relevant to a borrower's willingness to repay the lender.

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

Your report should have 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 generate an accurate 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 for a loan.

At Hill Valley Financial Services Inc., we answer questions about Credit reports every day. Call us: 503-657-3311.