Check average credit scores to compare your credit score with others in your state.
Credit score is a number lenders use to rate your credit worthiness. There are two main scores in use today - FICO and Beacon scores.
Scores are used to predict how likely an individual is to repay a new loan based on experience with millions of consumers. There are many different computer models that can calculate a credit score. In general, however, the computer model assigns points to information in a credit report. For example, making payments on time every month is positive for the score. Charging the maximum amount available on a credit card is negative. The computer adds the positive and negative points, and the resulting number is a credit score. Credit scores have proven over time to be a reliable indicator of whether or not a consumer would repay a loan.
A few examples that are considered in your score are:
* Current balances on accounts: Accounts showing all payments were on time are positive.
* Length of time accounts established: Long-established accounts are positive
* Bank revolving accounts: Lack of accounts, or too many can be negative.
* Reported delinquencies: Negative, especially if severe and recent.
* Number of accounts with balances: Too many credit card accounts may have a negative effect on your score.
* Number of finance company accounts: Loans from finance companies may negatively affect your credit score
* Recent payment history: An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances
* Proportion of balance to your credit limit: If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score
* Number of recent inquiries: Not all inquiries are counted. Inquiries by you, or creditors who are monitoring your account or looking at credit reports to make “pre-screened” credit offers are not counted.
* No recent (non-mortgage) account balance information: Can be negative when seeking mortgage loans
* Legal item filed or collection item reported: Negative, effect decreases with time. Accounts not paid as agreed and/or legal item filed. Your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy
* Employment and residency: Longer time in your job and at your residence can help your score.
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