| What is a credit score?
It's a number lenders use to help them decide:
"If I give this person a loan or credit card, how likely is it that I
will get paid back on time?" A score is a snapshot of your credit risk
picture at a particular point in time. The higher the score, the lower
the risk to lenders.
How are the scores calculated?
Every 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.
What is the most
important factor in a score?
Many 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.
What does scoring
ignore?
Your race, colour, religion, national origin,
sex, or marital status, your age, your salary, occupation, title,
employer, date employed, or employment history.
What is the highest
and lowest score?
Most Credit scores range from 300 to 850.. The
higher the score the lower the predicted credit risk for lenders.
Why do lenders use scores?
Scores provide an extremely valuable guide to
future risk based solely on report data. The higher the consumer's score
the lower the risk to lenders when extending new credit to a consumer.
Does everyone have a score?
For 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 change?
Your file is continually updated with new
information from your creditors.
How can I improve My Score and Credit Rating
Online?
Your score analysis will suggest things you can
do to improve your score overtime. Generally, 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. |