Checking Credit Score

Find Out How Your Credit Score Is Checked And How To Know If The Score Is A Good One

Be the odd one out-check your credit score

Knowing your credit score may be the first step towards improving your credit rating, but most people don't even take this first step. A recent survey carried out by LivingWithBadCredit.com indicated that more than three quarters of the people they surveyed reported that they didn't know their credit scores within a 200-point range. Half had never checked their credit score, and 17% hadn't checked in the last few years.

Where does the information come from?

The information from which your credit score is calculated is compiled by three major credit reporting agencies, Experian, Trans Union, and Equifax. A little over a third-35% to be precise-of your credit score derives from your payment history. Another third-30% to be precise-is calculated from the amount of your total outstanding debt. Within this, revolving accounts weight more than installment loans. Another portion-15% to be precise-depends on the length of your credit history; and smaller portions-10% each to be precise-describe the percentage of new credit, and the mix among forms of credit in your 'portfolio.'

How does someone else know if your credit score is a good one?

Consumer lenders and bankers most commonly use your credit score to estimate the likelihood that you'll pay your bills on time. Your credit score is the result of a mathematical formula that seeks to indicate the likelihood of a borrower falling delinquent in the next 24 months. A FICO score, for example, generally ranges between 300 and 850. Any score that tops 750 is considered a good credit risk, while a score below 620 is considered risky. Each lender decides for their own institution whether or not to lend to people with scores between thee two numbers.