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Credit score explanation
10 Things to Understand About Your Credit Score
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As lenders have continued to become more selective in issuing loans,
It’s more important than ever to understand your credit score
(1) What is a credit score?
• It’s a 3 digit number, the higher the number the better
• It is a statistical equation, and used to assess credit risk
• It’s used to see who qualifies for a loan and what type of interest rate they qualify for
• It’s the determining factor on whether you can obtain financing, and at what cost
(2) What is used to determine my credit score?
• Some of the information included in determining a credit score are: payment history, amounts owed on accounts vs. your credit limit, length of credit history, new credit, types of credit used
(3) Who uses a credit score?
• Lenders, employers, utility companies, insurance companies, cell phone companies, etc.
(4) How do I find out what my credit score is?
• By law, you are entitled to a free annual report from each bureau at www.AnnualCreditReport.com
(5) Aren’t the credit reports ordered online the same report as the lender gets?
• No, the online report ordered by consumers uses different formulas than the credit report that lenders get.
(6) Isn’t there only one company who provides credit scores?
• No, there are three different major companies. Equifax, Experian, Trans Union. Each one may score data in a different way. All scores are not created equal.
(7) Aren’t all credit scores the same?
• No, depending on the type of loan someone is applying for, the scores will vary. As an example, auto loans will weigh auto payments more heavily.
(8) What is an average score?
• According to Experian, the US Average credit score is 694.
• Scores can range from 300 to 850
(9) What is a Credit Score Simulator?
• There are online sites, including one at True Credit, that have tools showing how certain actions may affect a credit score.
(10) What can I do to improve my score?
• Pay your bills on time
• Check your credit report for errors
• Reduce your balance
Remember, your credit score is your Financial Calling Card
Knowledge is Power!
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Kathy (719-287-1049) KTorline@msn.com
