What’s in your credit score?
A good credit score can help you qualify for loans — and the best interest rates. Landlords, prospective employers, insurers, and utility companies also may factor your credit score into their decisions about you. That makes it important to maintain (or improve) your score. And to do that, it’s helpful to know just what goes into determining it.
More than one score
Different companies have different methods for calculating credit scores. They may place emphasis on different factors, and some may include details that others don’t. The result is that you never have just one credit score, but many. And, at any point, lenders may be looking at a different number than what you see.
In general, credit scores are based on the information in your credit report, which is essentially a history of your credit, loan, and payment activities. Factors in the report that typically affect your credit score include:
- The number and type of credit or loan accounts you have
- How long you’ve had those accounts
- Your total available credit
- Your total outstanding debt (i.e. what you owe)
- Your payment history (i.e. how much you pay and if you pay on time)
- New credit applications or newly opened accounts
- Credit problems, such as collection actions, foreclosure, or bankruptcy
Seeing your score
Credit scores usually range from 300 to 850, with a higher score indicating you’re less of a risk — for instance, that you’re more likely to pay back money that you borrow. Typically, you’ll have to pay to see any of your credit scores. You can do so through the three national credit reporting agencies: Equifax, Experian, and TransUnion, or by subscribing to certain credit monitoring services.
Just as important as seeing a score, though, is making sure the information defining that score is correct. So it’s wise to regularly review your credit report for accuracy. You can order free copies from each of the three main reporting agencies at AnnualCreditReport.com. The site also provides helpful information on what to do if you find errors.
If you have questions about how your credit score may be affecting your ability to qualify for loans or credit cards, or whether an improved score could lower your interest rates, talk with a banker at your local Westfield Bank branch or call us today at 800.368.8930 for personal assistance.