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What is your credit score?
Your credit score is what financial institutions use to determine whether or not to lend you their
money. The better the credit score chart the more likely the lenders are to give you money. The
lower your score, the more likely you are to be rejected for credit.
Your credit score shows how risky you are as a borrower by showing the lenders your previous
credit details, whether you paid any payments on time, how much you have borrowed previously,
how much you have outstanding and many more financial details.
What can influence your score?
The lenders actually use a proper mathematical formula to determine whether to give you credit or
not. This formula will use many different factors from your credit score chart. The credit bureaus
use a number scale to show how good your credit is. The scale starts at 300 and finishes at 900. If
you are anywhere near the top end, you have a very good credit score.
The following are taken into account when looking at your personal credit report score:
- Any previous bankruptcy
- Outstanding debts and credit limits
- Type of credit you have on your account – Do you have many types of different credit, mortgage, credit cards and loans
- How many times you have applied for credit and been rejected or accepted
- Missed payments, judgments and collections
Of course, there may be other factors and some of these may be used in different ratios. No one
knows for definite what the exact formula is when determining your score.
What other information does the report contain?
There is other information attached to your credit file not just your financial history. Other
information that can be found is as follows:
- Personal information – Name, address, previous addresses, telephone numbers, date of birth, social security number, employers and previous employers
- Credit information – This is what shows the types of credit you have. Credit such as cards, mortgages, loans, retail cards and other kind of credit
- Banking – Types of bank accounts, how long you have had them, debts owed to the banks, bounced checks and other banking related information
- Public records – Previous bankruptcy, judgments, and other related information
There may be other information on your credit score other than the above. Some of these may not
show on your score if you have no previous debts, problems or other such financial information.
Finding your credit score
The best way to find your credit score is to apply for your free credit report from any and all of the
three credit bureaus. Experian, Equifax and Trans Union have to give you your credit report once a
year for free. If you have been denied credit, you can get another report for free. Make sure you
always get your credit score chart at least once a year to keep your finances on the straight and
narrow!
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