Five Important Facts About Your Credit Score

Your credit score is a snapshot of your ability to pay back money you’ve borrowed, whether it’s a mortgage, car loan or credit card. Here are five important facts about your credit score.

Your score will drop slightly if you apply for new credit.

This is true if you are applying for several credit cards in a short period of time, but it usually doesn’t drop much. The loss of points is created by multiple requests, or inquiries, for your credit report by several credit-card companies. To some lenders, looking for new credit makes you a high list. Shopping for a mortgage or car loan does not affect your credit report the same way. Each inquiry from a variety mortgage lenders or car loan companies does not count as a separate request. Several mortgage companies asking for your report will count only as one inquiry.

Your credit score is not the only factor determining your credit worthiness. Lenders use a variety of tools to make credit decisions, including your FICO score. They look at information such as the amount of debt you can handle with your income, employment history and credit history. Based on their interpretation of this information, and their underwriting policies, lenders may extend credit to you even if your score is low, or decline for credit even if your score is high.
Race does not affect your credit score.

Scoring is based on credit-related information only. Factors like race, nationality, gender and marital status are not included. The Equal Credit Opportunity Act (ECOA) prohibits lenders from considering these factors when considering extending credit. Several industry studies have found that scoring is an accurate and consistent measure of repayment for people with credit history.
Credit Scoring does not invade privacy.