Credit Score 101

By John L. Fischer, Personal Finance Writer   

Hall of Fame football coach Vince Lombardi said, "Winning isn't everything ... it's the only thing." It's sort of the same with credit scores.

To banks, mortgage lenders and landlords, what matters most is your credit score. Where you've worked and for how long — even the salary you earn — is not part of any of the various, secret credit-score formulas.

In fact, your rights under the Consumer Credit Protection Act prevent any and all employment, racial, marital, gender and salary factors — even your age — from being included in your score.

To the creators and users of credit scores, these scores are all about one big question: Have you established a reliable, repeatable pattern of paying your bills — in full and on time? Like coaching legend Lombardi said, "It's the only thing."

Your credit report: Not the same as your credit score

When you get a credit report (whether it's a free credit report or one you pay for), remember that you don't get your credit score, too. You'll have to buy that separately.

While that may be a very simple distinction, understand that credit reports and credit scores are completely separate things. Here's a more specific example (again, courtesy of Coach Lombardi) that should help you see why your employment history isn't much of a factor in your credit score.

• Paying off your debts is the only thing. You can have a credit score over 750 even if you haven't worked for years — even if you've never worked at all.
  

Of course, you'll probably need some income to pay your bills, but your credit score is more about your debt-to-income ratio: How much you owe vs. how much money you can spend.

To borrow from another popular sports cliche, consider this:

As far as your credit score goes, potential creditors want to know the bottom line: that you won the game. They're much less interested in how you played.