Credit Score Information

A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person, which is the likelihood that the person will pay his or her debts. A credit score is primarily based on credit report information, typically sourced from credit bureaus or credit reference agencies.

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.

Credit scoring is not limited to banks. Other organizations, such as mobile phone companies and government departments employ the same techniques. Credit scoring also has a lot of overlap with data mining, which uses many similar techniques.

Having a high Credit Score can make a difference of up to 18% in loan repayment costs. So it's to your advantage to keep your credit score as low as possible.

Credit scores are based on your personal information and financial decisions you've made over the past years. A score is calculated based on many such factors, like whether or not you have had any late payments, collection notices or actions, outstanding debts and so on. The number of accounts you have open, how long you've had the accounts open and the number of credit applications you've made in recent months also gets tossed into the mix. The result is a "credit score," a fairly standardized means of determine your credit worthiness, or how likely you are to repay a debt.

If you don't have a good credit score, there are ways in which you can work toward improving it. For starters, make sure to pay all of your bills on time. Avoid collections, missed payments and late charges if at all possible. Make sure to steer clear of your max credit line. Keeping your debt too close to the maximum limit will raise red flags. Also, if you're planning on buying a home or another large purchase that requires a credit check, don't open or apply for any new credit accounts within 90 days of the purchase. New accounts and inquiries into your credit knock your score down even further.

The simple answer on how to get a good credit score is to avoid taking on any additional debt, paying the debt you do have on time and working on lowering your debt to maximum credit amount ratio. br>
Curious what your credit score is? The results are available to you through several web sites, or through one of the three major credit scoring institutions: Equifax, Experian and TransUnion. Consumers are also entitled to a free annual credit report; visit our site for more information.