A Score that Really Matters: The Credit Score
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Before lenders decide to lend you money, they need to know that you are willing and able to repay that loan. To figure out your ability to repay, lenders assess your debt-to-income ratio. To assess your willingness to pay back the loan, they consult your credit score.
Fair Isaac and Company calculated the original FICO score to assess creditworthiness. For details on FICO, read more here.
Credit scores only assess the info in your credit profile. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was invented as a way to consider only that which was relevant to a borrower's willingness to pay back the lender.
Your current debt load, past late payments, length of your credit history, and other factors are considered. Your score considers positive and negative items in your credit report. Late payments count against your score, but a record of paying on time will raise it.
To get a credit score, borrowers 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 build an accurate score. Some people don't have a long enough credit history to get a credit score. They may need to spend some time building up credit history before they apply for a loan.