Understanding what is on your Credit Report

     If you have applied for credit in the past you may have been told that your credit score is a three digit number, yet you may not have understood what the number was or even what it should mean to you. Your credit score, also known as a FICO score, will range from 300 to 850, and it is your credit rating. In other words, the higher your score the better your rating and the better your rating the more likely you will be approved for credit, a loan, insurance, or even a job.

     What you may not know about your credit score is that you have three of them, one for each credit bureau. The score that each bureau gives you is their prediction of how likely you are to pay your bills or repay credit that is extended to you. Obviously, the higher your number the more appealing you are to a lender that is considering lending to you, and the higher the number the lower your interest rate will be, as this makes financing more affordable.

     Your credit score is obtained by many different creditors who never even look at your actual credit report. There are many different financing offerings out there that will give you an instant approval, and with these programs they are going completely off of your scores and not your full credit report. While there are a lot of companies that just use the score, there are also those that spend a lot of time looking at your credit report in addition to all of the other information that you are able to supply them in the way of reference letters, employment, and finances.

     How do you get your credit score? Basically you are given points when you pay your bills, repay extensions of credit, etc and you lose points when you don't pay your bills on time. Everything you do in reference to paying bills can and likely will be reported to the credit bureaus, so you should focus on paying those bills and make timely payments as in the long run this all impacts your credit worthiness. Your credit score should always be a three digit number, but when you understand your credit score and you know where it comes from, hopefully you will be able to work toward having it be at the higher end instead of the lower end of the spectrum.

Disclaimer: This site is not , nor should it be taken to be, legal, financial or other professional advice. It merely provides a generalized guidance and generalized information only. Consult a financial advisor or an attorney to discuss any legal or financial issues involved with credit and debt decisions.