Most consumers have heard of the credit score and the various credit reports that are available. Many consumers understand that these files are based on a person's level of debt and the manner in which that debt was repaid to the lenders. There are other issues, though, that are less obvious to most consumers, yet they can have a profound effect on what is known as creditworthiness. This article explores some of the lesser known variables that affect a person's creditworthiness.

It is important for consumers to understand that debt is the fuel that runs the credit reporting machinery. If there were no debt there would be no need for repayments, and without repayment there would be no need for reporting. Every credit report is basically a log of debts incurred and the history of how those obligations were repaid. It reflects whether or not a particular loan was paid on time or if it was late. It details the consumer's income as compared to his or her outstanding loans. It contains personal information as well as any legal actions that may have occurred during the course of the report.

As you can see, debt is the catalyst. Debt and how it is handled during the course of any particular loan and all loans, in general, make up the factors that are used to determine a person's creditworthiness.

Of particular importance is the issue of timely payments. Failing to pay bills on time or not paying them at all can be one of the most detrimental entries into a credit report. In many cases, these late payments can stay in the credit report for up to seven years, and during that time, lenders will take their inclusion into the report as red flags and warnings.

Another issue that is used to determine a person's current creditworthiness is the amount of debt that a person has as it compares to income. It goes without saying that the more income a person has the more debt that person is believed to be able to carry. The same is true conversely: the less income a person has the less debt he or she should be taking on. The debt-to-income ratio can vary, however, and there is no one set limit that governs loans at all times. Generally, the tighter the credit market is (meaning lenders are willing to take fewer risks) the lower the number will need to be in order to secure a new loan.

One of the best ways to improve creditworthiness overall is to pay off loans on time. This not only shows lenders that you are financially able to make your payments but it also lowers the amount of current debt that you have on file. This decrease in your overall debt will lower your debt-to-income ratio, which is a good thing.

Creditworthiness can also be improved by communications with the lender when things begin to go wrong. Consumers are allowed to include written statements of excuse for those occasions when they may have been in financial straits. Lenders do not have to give these statements any weight but many will do so especially if supporting documentation is included with the consumer's statement.