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What is a credit score?A credit score is a number used by lenders to determine if you are more or less likely pay your loan or credit card bill on time. Also called a risk score, your credit score helps lenders predict the risk involved with lending you money.Credit scores are generated using statistical models using information from your credit report and sometimes your credit application. Credit scores are fluid, and change as your credit activity changes. Making a late payment, opening a new credit card account or paying off a debt could cause your credit score to fluctuate. Many different credit scoring systems are in use today, and scores may vary from lender to lender or loan type to loan type. You may see a different score when applying for a car loan vs. a mortgage loan for example. How is my credit score calculated?Credit scoring compares information in your credit report to the performance of other consumers with similar credit characteristics. Your credit score is based on a combination of factors including:For the most part, positive credit characteristics make your score higher and help you to qualify for better loans and negative characteristics make your score lower making it more difficult to qualify for the best loan terms. Things that do not affect your credit score include:How does my credit score affect me?Your credit score is an important indicator of your financial health and lenders use your credit score to determine:While your credit score is a key determinant of your creditworthiness, lenders also examine the information on your credit report and your loan application. Regularly checking your credit report enables you to: Checking your credit is important and many reporting agencies now offer free or credit reports. Visit our Credit Reporting Agencies page for a list of places to receive your credit report online. |
