Free Credit Report Scores

The free credit report scores are produced by a model developed from a large sample of borrowers. The sample is analyzed to find which characteristics determine creditworthiness and to what degree. The analysis considers such things as the number and type of accounts you have, your record of bill paying, your outstanding debt and any delinquencies. Each factor the scoring model looks at is given a certain number of points which are then totaled for a composite credit score. Statistical analysis has shown that the higher your rating is, the more likely you'll repay a debt.

The model developed for the free credit report scores is used because it allows an unbiased view of your credit. For instance, your gender or race aren't a part of the score so they won't have any effect on your credit rating. This statistical objectivity makes the creditor's job easier and also prevents him from breaking any equal opportunity laws due to some subjective bias.

One of the most significant factors in the free credit report scores is your history of bill paying. If you've consistently been late in paying bills, had an account go to collections or declared bankruptcy, your score will be lowered. Another important factor is the ratio of debt owed to your credit limit. And the closer your are to your limit, the more it lowers your score.

So what steps can be taken to improve free credit report scores? Two basics actions are paying your bills on time and reducing the size of your overall debt and/or the number of your accounts. Don't have more credit cards then you need since creditors see each as a potential source of new debt. Some scoring models rate the quality of your accounts. Loans from finance companies or debts to rent-to-own stores have a negative impact with these models. And of course, correct any errors or omissions in your credit report and make sure that all the favorable accounts are recorded.