The advantage of a free online credit score is that it sums up your credit status in a single
number. But if your credit is not the best it could be, you might want to know how to improve
it. And to do that, you need to know what the free online credit score measures and what
actions are necessary to strengthen any weak areas.
The free online credit score is based on the analysis of credit reports to produce a formula
that predicts how well a person will pay his bills. All scoring models aren't the same and
because the credit factors involved are interrelated, you can't always improve just one item to
raise your score. But there are key areas that most scores look at and you should too.
Payment history
Paying your bills on time and for the full amount is a significant factor. Although creditors are
generally most concerned about payments made in the last two years, any problems you have
will stay on your credit report for seven years.
Amount of debt
The free online credit score usually weighs both total debt owed and how high your individual
balances are. The higher the balances, the less room you'll have for new credit.
Length of credit history
The free online credit score formula may measure when you first got credit and what's the
average age of your accounts. The longer you've shown an ability to handle a given level of
credit, the more likely you'll be able to get additional credit.
Recent account activity
Recency is significant for all areas, but especially when opening new accounts. Opening or
applying for several new accounts is seen as a negative because it looks either like you've
mismanaged your finances or you're becoming overextended. New accounts also lower the
average age of your accounts so this further reduces your score.
Account variety
Does your credit report show a mixture of credit account types? You tend to get rated better
if you have for example, an auto loan, a personal loan and a credit card instead of just three
credit cards. Also, your free online credit score may rate certain types of loans like finance
company loans as a negative.
To get your free online credit score, free credit report and free 30 days of credit monitoring,
please go to
free instant credit reports.
