Credit Scoring

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What is a “credit score”?
A credit score is a number used by Credit Reporting Agencies. A score is assigned to every person who has a credit file. In other words, you probably have a credit score. Credit scoring is intended to measure your credit risk. The score is calculated based on several factors, including how well you have paid your debts over time, the amounts you owe, how long you have had credit accounts, and the type of credit you have.

Credit scores typically range from a low of about 200 to a high of about 900. The higher the number, the better the score. Presently, a score of about 660 or better is considered good.

Who uses credit scores?
Many lenders – including about 90% of credit card issuers and 75% of mortgage lenders (according to the National Consumer Law Center). Creditors also use credit scores for marketing, collection, adjustment of interest rates, and approval or denial of additional credit. Increasingly, auto and homeowners insurers use scores to determine eligibility and premiums. Even employers are using credit scores in hiring or other decisions.

Can you obtain your own credit score?
While the law does not require the Credit Reporting Agencies to disclose your score, the three major bureaus will make your score available for a fee.

Is your score the same at all three major credit bureaus?
No – there may be a large difference – up to 100 points – among the bureaus. This is because each one might have different information about you. To get a complete picture, check with all three bureaus. The three major bureaus are TransUnion, 1-800-916-8800,; Equifax, 1-800-685-1111,; and Experian, 1-888-685-3742,

How can I improve a low credit score?
You can raise your score, according to creditors and consumer advocates such as the National Consumer Law Center, by:

  • Paying debts on time – if you are falling behind, try to negotiate an acceptable repayment plan that won’t be reflected on your credit report.
  • Keeping balances low on credit cards and revolving loans.
  • Limiting the number of new credit accounts you open.
  • Checking your credit record regularly, and disputing any inaccurate or old information– see How Can I Correct Errors in My Credit Report?

Reviewed August 2009