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Credit ScoringIt's a number lenders use to help them decide whether or not to give you a loan. your score will vary over time and lenders all interpret your score differently. Generally the higher the score, the lower the risk to lenders. How is it determinedEvery score is calculated by using a mathematical formula that evaluates many types of information on your credit report, compared to information patterns in millions of past credit files. The score can then identify your level of future credit risk. Different FactorsMany credit score and credit rating companies use five main factors to determine your credit score. Listed from most important to least important, these are: Payment History, Amount owed, Length of credit history, New credit, Types of credit in use. These will vary between credit rating companies but the essentials will remain the same. Reason For ScoresScores provide an extremely valuable guide to future risk based solely on credit report data. The higher the consumer's score the lower the risk to lenders when extending new credit to a consumer. Debt Consolidation Loans often require a good credit score. Does everyone have a credit scoreFor a score to be calculated on your credit report, the report must contain at least one account that has been open for six months or longer. In addition, the report must contain at least one account that has been updated in the past six months. This ensures that there is enough information, and enough recent information, in your report to compute an accurate score. Your score also will not calculate if there is a fraud statement on your credit file or if all trade lines are disputed. How often does the score changeYour credit file is continually updated with new information from your creditors. How can I improve Credit Score and Credit Rating OnlineGenerally, people with high scores consistently: Pay bills on time Keep balances low on credit cards and other revolving credit products Apply for and open new credit accounts only as needed. |
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