What is a Credit Score

 A credit score is a number generated by a mathematical formula that is meant to predict credit worthiness. Credit scores range from 300-850.  Your credit score is important because it is a financial tool used by banks, insurance companies, credit card issuers, landlords, mortgage finances, auto-loan providers and other lending entities to determine the creditworthiness of an individual and assess how much risk you carry before giving you any credit.  Therefore, having a high credit score can save many thousands of dollars over the life of your mortgage, auto loan, or credit card. 

Basic Categories of Information on the Credit Report:

Basic Personal Information: is originally reported by the individual borrower when opening his/her line of credit. This is updated throughout the borrower’s lifetime as new lines of credit are opened. Full name, date of birth, current address, social security number and employment information, and all the places lived.

Collections and Account Information: is updated most frequently and proactively, usually monthly, by collection agencies and lenders directly to the credit bureaus. This is information most people think of when discussing a credit report. This is usually separated into two buckets of information: all open lines of credit and all accounts that may be delinquent or in collections.

Public Financial Records: are the only pieces of information that are proactively collected by the credit reporting agencies solely for the purpose of reporting. This can include bankruptcy filings, tax liens, or any court judgments that affect your credit status.

What Affects Your Score: 

• Payment History - 35%
• Capacity and Amount Owed - 30%
• Length of Credit - 15%
• New Credit - 10%
• Types of Credit Used - 10%