Credit Score

A credit score is important if you ever want to borrow money to buy such items as a car or mortgage on a house. Lenders access information regarding your credit history from 3 major companies: Equifax, TransUnion and Experian. When they run a report on your credit, the higher the credit score you receive, the more likely you will be able to borrow from them.

Your credit score will be based on information about yourself and your credit experience. It will look at such info as your history of bill payment, number of accounts you currently have open, late payments, collection actions, outstanding debt, and the age of your accounts. All of this information is then scored using statistical information comparing your credit with that of similar consumers.

Points are awarded on various factors and predict if you are able to repay debt. The total number of points is considered your score and it is a measurement of how creditworthy you are.

Because your credit is so important it is necessary to check your credit score and make sure that it is accurate before submitting an application for credit. The 3 major companies listed above can help provide this info to you.

This scoring method is used because it is more reliable than the personal judgment or other subjective measures. It treats all individuals who apply fairly and equally on the same measures. The model which is developed used a random statistical sample of customers and an analysis is done to identify characteristics that relate to credit worthiness.

There are no short ways or tricks to improve your credit score. It is a process that takes time and you need to make sure to do the following:

• Pay your bills on time
• Decrease outstanding debt
• Build credit history over time
• Do not apply for credit frequently
• Limit the number of credit accounts

Following these tips you can improve your overall credit score.