Credit reports give you the financial facts and figures about your credit, but they don't tell
you how it rates. But free credit score information can. The single score number
shows you where your credit ranks from poor to excellent. And you can use the free credit
score information to help build up any weak areas in your credit you may have.
Free credit score information uses a formula that assigns points to key items in your credit
report. The points are determined by testing which report factors are most predictive for how
a person handles credit. The sum of these points is your score with the higher the score, the
better your credit.
The most widely used credit score is the FICO which is produced by Fair, Isaacs and
Company. And to understand free credit score information it helps to look at how the FICO
goes about rating your credit.
Payment history - accounts for about 35% of the FICO score
The free credit score information rates both the seriousness of any bill-paying problems and
their recency. To maintain or improve your score in this area you just need to pay your bills
on time. It's that simple.
Amount you owe - accounts for about 30%
The score rates your total debt, the individual account balances and the types of credit accounts.
The way to raise your score in this area is to pay down any accounts with high balances and to
lower your overall debt.
Length of credit history - accounts for about 15%
The free credit score information looks at how long you've had credit and the average age of
all your accounts. The older an active account is, the better. So don't open several new accounts
at once as this will lower your score.
Recent activity - accounts for about 10%
Both accounts recently opened and requests for your credit report are rated. If you've opened
several new accounts it can be seen as a possibility you're overextended. Or if you have
several recent credit report requests, either you got the credit and could be overextended or
you got turned down and are a poor credit risk. So don't open more than one account at a time.
Types of credit used - accounts for about 10% of your score
The type and variety of accounts is measured by the free credit score information. For
instance, a credit card, a department store account and a car loan are better than three
loans from a finance company.
To get free credit score information, your free credit report and free 30 days of credit
monitoring, please go to
free instant credit reports.
