Learn More About Your Credit Score

Posted on February 28 2007

A credit score is a composite based on a large number of complex calculations. Some of these calculations include your payment history, your credit history, the amount of credit you have, the amount of credit you are using, and public records such as bankruptcies or liens. The three major U.S. bureaus calculating this information are: TransUnion, Experian, and Equifax.

Some important information that, by law, is prohibited from being on your credit report include: your race, religion, and gender. Where you were born and whether or not you’re married, single, or divorced are also non-factors in your credit score. The Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA) help ensure that bias is taken out of credit scoring.

Here are some simple ways to damage your credit score: Pay your bills past due, don’t pay your bills at all, write bad checks, file bankruptcy, accounts in collections, too many credit cards, too many inquiries for credit, and going over your credit limit.

Here are some basic ways to begin improving your credit score: Pay your bills on time, make larger than minimum payments on your credit cards, maintain two or three credit cards, stay under your credit limit, and keep debt to a minimum.

If you would like to run a free credit report on yourself you can go to AnnualCreditReport.com. I recommend running a report if you haven’t for awhile. Many credit reports are incorrect and should be checked at least twice a year. This will insure you that the proper information is listed under your name.

Your credit score is a report card on how well you manage your finances. This score determines who will lend to you, what interest rates you will get, and how much you can borrow. The better the score the more money you can save.

The more you know about your credit report the better. If you need assistance understanding your report I encourage you to contact one of our counselors. We are always happy to assist.

Jeral Croaker -FLCS Certified Credit Counselor