Credit Rating Score

Credit Rating Score Basics

In a nutshell, the credit rating score is a number that lenders use to determine how much of a credit risk you are. This number generally is between 300 and 850, and indicates to them how well you are paying your debts.

If you have a high credit rating score, say about 720 or above, you are considered an excellent credit risk and will probably be given credit at very good rates. Any score in the low 600s or below will more than likely mean you'll have trouble getting credit.

Credit scores provide lenders with an overall, simple view of how you are doing financially. However, various people can possibly interpret the information in different ways. Not all lenders put a great deal of emphasis on a rating score.

There are lenders who will give you some considerations and will work with you if you have a credit score in the 600s. Others will only work with those who are  in the higher brackets, looking at no other factors -- just eh credit score.

Credit Reports and Rating Scores

Your credit score is based on your credit history which is a complete record of your past and current debts and repayments -- with an emphasis on what has gone wrong. Credit bureaus use mathematical calculations to determine your credit score from the information contained in the credit report.

The big three reporting agencies are Experian, Equifax and Trans Union. They will give a credit rating report to any of their client companies needing information to determine your credit readiness.  It is interesting to know that credit reports of someone you live with may be linked to yours -- for example, your husband's or wife's rating report could be linked closely with yours.

How Credit Ratings Are Worked Out

Most credit bureaus use the FICO (an acronym for the credit score calculating software invented by Fair Isaac Corporation) system.

The status of your present debt is sorted out and prioritized in this way:

1.  whether you've paid past debts

2.  how much debt you currently owe

3.  your credit history

4.  the types of debt you incur

5.  how many times your credit has been checked recently.

Recent events carry the most weight. In general, credit bureaus and lenders look at patterns in their prospects borrowing/repayment history. For instance, people with lots of debt usually do not have great rates of repayment.

General Overview of Credit Reports Scores

• Credit reports are assembled by credit bureaus who use information from their client companies, such as credit card companies and utility companies.
• Once a file on you is opened, your personal debt/payment information is recorded. If you are late paying, the client company informed the credit bureau. Unpaid bills, overdue bills or other problems with your credit put "dings" on your report and affect your rating score.
• The type of debt you have, how much debt, how regularly you pay your bills on time and your credit accounts are all used to calculate your rating score.

Checking Your Credit Rating

Credit agencies cannot have information on file about you without letting you know what they have once you make the inquiry. In some instances, the credit reports are free. At other times, a small fee is required.

After reviewing your credit report and score, you have the option of letting the credit bureau know of any disagreements you have regarding their file on you.  This is done in writing and made a part of your credit rating report.

For  more information about credit scores and related info, see:

Eliminate Credit Card Debt - Several Ways Available
Credit Repair - Best Ways to Better Credit
Credit History Report - Influences Your Financial Future
Credit Scoring - Credit Score Facts for Consumers
Credit Scoring Information from Equifax