What is a Credit Score?

Credit scoring is a standard method used by all lenders so that they can measure the risk of lending to you or providing you with credit.

Whenever you apply for a loan, credit card or mortgage your lender will use your credit score to calculate whether or not your application is acceptable.

What happens is that all of the information on your personal credit report is represented as a simple number, usually on a scale of 0 to 1000 as this makes it much easier for your lender to make a decision about your credit application.

The least risk you pose to a lender the better your credit score will be.

Be aware that your credit score will directly affect the amount of credit actually offered and that it will also determine the interest rate that you will be charged on the loan or credit you are applying for.

You can easily get a Free Credit Report if you want to see the information that lenders use to calculate your credit score.

This entry was posted on Thursday, February 9th, 2012 and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

7 Responses to “What is a Credit Score?”

  1. jampagnar keman on July 31st, 2010 at 12:54 pm

    awesome video!

  2. ommer on August 18th, 2010 at 6:46 am

    Add in Credit Card Debt. The one trillion dollars in consumer credit card debt creates approximately 15-30 BILLION DOLLARS of interest rate charges every month.

    While I think it is reasonable to charge some interest, why should older credit card debt have interest rate charges at all?

    The profit was made in the first three years on the interest rate charges, after that period of time, just let the debt be paid off interest free.

    That means people have to work less, which means they use less resources to pay down debt.

    Yes, Credit Card Debt causes global whatever, whatever. [...]

  3. featlane gierzilig on October 6th, 2010 at 7:56 am

    It takes YEARS to build a good credit history. There is no quick fix.

    You really need at least 24 months of consistent, on-time payment history. Use your existing credit cards for small purchases and pay in full every month. You have to use the cards to build history.

  4. xmoanix on March 29th, 2011 at 5:15 am

    If you haven't done this already, you get one free credit report from each of the main credit reporting agencies, each year. The only official site, which doesn't cost a penny is annualcreditreport.com

    This is the site where you can get your free report each year, as required by federal law. You don't have to sign up and then cancel to avoid being charged, there is no charge. Don't sign up at any other site, even the major reporters sites either. They will charge you if you do not cancel.

    If you live in Colorado, Georgia, Maine, Maryland, Massachusetts, New [...]

  5. DR on April 19th, 2011 at 5:48 am

    Vivi, congrats on the progress you’ve made so far. Based on the information you’ve provided, the top priority should be taking care of the outstanding bills. Get them resolved will be the best thing you can do for your credit. As for the number of credit lines, keep a couple of things in mind. First, getting new credit can lower your credit score in the short term because of the hard inquiries. In the long run, however, it may improve your score if it eventually increases the amount of available credit. But at this point, I wouldn’t get more credit [...]

  6. maen on November 7th, 2011 at 2:33 pm

    cenk You should use your credit card more, they have a sale on hair gel on amazon.com. think of all the starving children at the credit card company

  7. sanbaugiac mala on November 30th, 2011 at 7:47 am

    Free Credit isn’t free, and this band’s lead singer is lip-syncing. At least now they are looking for a real band.