Credit Score Information
"Credit score information online and average credit rating. Ever wondered what a credit score is? Find out what your credit score means, get a better one and order your free credit report online."
Check out these other articles about credit reports & scores:
Credit Report 101 - Facts & Myths About Credit Reports
Reasons To Check Your Credit Report
FAQ About Credit Bureau Reports & Credit Scores
What is a Credit Score?
Included in your credit report are credit scores. However,
not everyone knows exactly what a credit score is. Your
credit score is a number used by lenders as an indicator
of how likely you are to repay your loans. Your credit score
is generated by a mathematical formula utilizing the data
from your credit report. Lenders have been using credit
scores as part of the lending decision for more than 30
years. Your Credit Score is a three-digit number that represents
your credit rating. Using a scale widely accepted by the
lending industry, the majority of Personal Credit Scores
are between 400 and 900. Higher scores are better.
Your credit score is calculated by using some basic information
about your credit history. The following are some of the
things that are taken into consideration when your credit
score is calculated.
1. Payment History - Information about the way you paid
your credit accounts in the past, including late payments
and bankruptcies.
2. Credit accounts - The number of credit accounts that
you have and the different types of those credit accounts
(e.g. credit cards, auto loans, etc.).
3. Credit usage - The amount of credit you are using,
and the amount of credit still available.
4. Length of credit history - The number of months your
credit accounts have been on your credit report.
5. Credit applications - The number of times you have
applied for credit in the recent past.
6. Bankruptcies - The presence and age of bankruptcy
records (if any) on your credit report.
To understand your credit score more clearly you can access
some information on this site that pertains to reading your
report.
Understanding your credit report and credit scores is very
important. You need to understand what information that
lenders are taking into consideration when deciding to give
you a loan or not. You also need to understand why some
agencies such as Equifax, Experian and TransUnion may all
give you a different credit score.
Differences in credit scores may be due to the fact that
not all three agencies have received the same information.
If a lender or creditor is only reporting to one agency,
for example Equifax, then requesting a credit report and
credit score from Experian or TransUnion would be pointless.
This is why a merged credit report is best. You will receive
information from all three agencies.
What is the credit score range? What is the average credit rating?
Credit scores range from 350 to 850. The higher the number, the better credit rating and in a stronger financial position you'd be considered to be. A score in the 700s or higher is excellent, around 650 is a midrange score, and anything lower than 600 has room for improvement. What is the average credit rating? The national average score is 676.
Some statistics about the score distribution (percentiles):
- 90% of the US population is below 790
- 70% of the US population is below 755
- 50% of the US population is below 710
- 35% of the US population is below 670
- 15% of the US population is below 600
5 Ways to get a better credit score
Your credit score provides a sense of what kind of credit
risk you are to potential lenders. This picture reflects
your risk at a specific point in time. A picture does not
change; however, when you take another one, you will probably
look a little different. Similarly, when your credit information
changes, your score will also change to reflect the updated
information.
There are steps you can take to ensure that each time a
new “credit picture” is taken, it shows your
best side.
There are several things that you can do to improve your
credit score. Below are five easy ways of improving your
credit scores.
1. Be Punctual
You should always pay your bills on time. Late payments
and collections have the greatest negative effect on your
credit score.
2. Check Your Credit Regularly
You should always check your credit report and credit score
on a regular basis. It is recommended that you do so every
3-6 months. By doing this you can check for inaccuracies
and take the steps to fix any that are found.
3. Watch Your Debt
You should never allow your account balance to any higher
than 50% of your limit. What this means is, if your limit
is $1000 then your balance should not exceed $500.
4. Give Yourself Time
Give yourself time – Time is one of the most significant
factors that can improve your credit score. Establish a
long history of paying your bills on time and using credit
responsibly. You may also want to keep the oldest account
on your credit report open in order to lengthen your period
of active credit use.
5. Avoid Excessive Inquiries
A large number of inquiries occurred over a short period
of time may be interpreted as a sign that you are opening
numerous credit accounts due to financial difficulties or
overextending yourself by taking on more debt than you can
easily repay.
Check out these other articles about credit reports & scores:
Credit Report 101 - Facts & Myths About Credit Reports
Reasons To Check Your Credit Report
FAQ About Credit Bureau Reports & Credit Scores
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