Credit Score

Your credit score is a system creditors use to help determine whether to give or deny you credit. Information about you and your credit history, such as your the number and type of accounts you have, your bill paying history, outstanding debt, late payments, collection actions, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system assigns points for each factor that helps creditors predict who is most likely to repay a debt. A total number of points is your credit score, which helps predict how credit worthy you are. They determine how likely it is that you will repay a loan and make the payments when due.

Improving your score:
To help improve your credit score, concentrate on paying down outstanding balances, paying your bills on time, cancelling unused credit cards, and not taking on new debt. It will take some time to improve your score significantly.

Information Evaluated in your Credit Score:

• How long is your credit history? Length of your credit track record is considered. A short credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.
• How many and what types of credit accounts do you have? It is generally good to have some established credit accounts, but too many credit card accounts could have a negative effect on your score. In addition, many models consider the type of credit accounts you have. Under some scoring models, loans from finance companies could affect your credit score negatively .
• How much is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.
• Have you recently applied for new credit ? If you have applied for too many new accounts recently it could negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make "prescreened" credit offers are not counted.
• Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.