Lenders or grantors are interested in your ability to pay back principal plus interest, fees, and other charges. They steer away from taking financial risks on consumers with a less than adequate financial reputation. Your financial credit history, credit report, and your FICO score are the indicators they measure as they extend credit to you. Hence, they are not interested in other aspects that you might think should be important to your financial character.

How to

Here are a few indicators that might be considered essential for you, your family members, or your friends that lenders do not necessarily take into account or include in their calculation of credit-worthiness:

- Income level, cash saving, investments in stocks or bonds, and assets
  - Even if used for collateral do not affect the score.
- Length of residence
  - Might indicate stability to your personal character
  - Makes no difference for the credit reporting agencies in calculating your FICO score
- Length of employment
  - Might be an asset to your employer
  - Does not enter into the calculation of your FICO score.
- Occupation or social status
  - No impact on calculating the score.

Keep in mind that having cash in hand does not necessarily mean the consumer is paying all bills in full and on time. The lender can not derive a correlation between the two. The same logic can be drawn for stability in housing and employment. Only the factors that make the score can help or hurt the score.

Practice

Now that you know what does not affect the FICO score, think of paying it forward and discuss these factors with a friend or a family member.

Congratulations! You can move on to Chapter 5. How do I protect, improve, or repair my FICO Credit Score?

To review the full module on the FICO score, click here.