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What is your credit score?

What is a Credit Score and why is it important?

A credit score is a number calculated by a credit bureau, a lender or another company for use in making a decision on a loan application or other product or service. May lenders use a system developed by Fair Isaac and Company called the “FICO score.” Think of credit scoring as a point system based on your credit history, designed to help predict how likely you are to repay a loan or make payments on time. Everyone with a credit record also has a credit score. Different lenders may use different scoring systems, so your score may vary significantly from one source to another.

In general, the better your credit score the better your chances are of getting a loan with an attractive interest rate. So when it comes to getting a good loan, it's important that your credit report – the basis for your credit score – is accurate, complete and in the best shape possible.

What are the most important factors in determining my credit score?

Typically, your credit score is most influenced by two factors: how you pay your debts and how much debt you owe. Late payments on loans, a pay bankruptcy, debt collections or a court judgment ordering you to pay money as a result of a lawsuit will negatively affect your credit score.

Lenders want to be sure that the debt you owe is manageable. Lenders get concerned if you have a significant amount of debt compared to your income.

Other factors that can affect your credit score include how long you've used credit, how often you've applied for new credit and whether you've taken on new debt.

How can I get my credit scores?

Your scores, along with an explanation of how the score was derived, typically are available online for a fee. You may want to call or check the Web sites of any of the three major credit bureaus. Remember, your score may vary from one company to another.