Keys to Understanding Credit Scoring
Your credit score is determined by several factors on your credit report. Understanding your credit score requires knowledge of these factors. There is a wide variety of credit scoring formulas, each of them relevant to the application it was designed for. The basic elements of your credit score are: payment history, outstanding debt, credit account history, recent inquiries and types of credit.
If your payment history includes a good record of on-time payments, you have the beginnings of a good credit score. Outstanding debts over 50% of the available credit extended to you can have a negative effect on your credit score. The length of your credit history can be used to evaluate your creditworthiness. The longer, more positive history you have, the better your credit score will be.
If you have a large number of recent inquiries into your credit, a lender may think you're overextending your financial limits. A good mix of different types of credit can reflect positively on your credit. By learning about these factors, you are well on your way to understanding your credit score and how to improve it.
Credit scores can vary depending on the lender. Each has their own criteria for what makes a good credit score. They retrieve information from the three major credit bureaus (TransUnion, Equifax and Experian) and use that information to determine if a credit score fits into an acceptable credit risk category. An understanding of your credit score can give you confidence when applying for a loan, mortgage or credit card, and save you time and money.
With a 3-in-1 Credit Report from TrueCredit, you can get a comprehensive look at your credit report for each major bureau and your credit scores with them. You can also find out if there is anything on your credit report that may prevent you from getting a loan or the best interest rates. If you get a credit report early enough, you can correct mistakes on your report before applying for a loan. Understanding your credit score and staying current with your report from each bureau can help you maintain a high credit rating.
| 
