Credit Score

Check average credit scores to compare your credit score with others in your state.

Credit score is a number lenders use to rate your credit worthiness. There are two main scores in use today - FICO and Beacon scores.

Scores are used to predict how likely an individual is to repay a new loan based on experience with millions of consumers. There are many different computer models that can calculate a credit score. In general, however, the computer model assigns points to information in a credit report. For example, making payments on time every month is positive for the score. Charging the maximum amount available on a credit card is negative. The computer adds the positive and negative points, and the resulting number is a credit score. Credit scores have proven over time to be a reliable indicator of whether or not a consumer would repay a loan.

A few examples that are considered in your score are:

• Current balances on accounts: Accounts showing all payments were on time are positive.
• Length of time accounts established: Long-established accounts are positive
• Bank revolving accounts: Lack of accounts, or too many can be negative.
• Reported delinquencies: Negative, especially if severe and recent.
• Number of accounts with balances: Too many credit card accounts may have a negative effect on your score.
• Number of finance company accounts: Loans from finance companies may negatively affect your credit score
• Recent payment history: An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances
• Proportion of balance to your credit limit: If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score
• Number of recent inquiries: Not all inquiries are counted. Inquiries by you, or creditors who are monitoring your account or looking at credit reports to make "pre-screened" credit offers are not counted.
• No recent (non-mortgage) account balance information: Can be negative when seeking mortgage loans
• Legal item filed or collection item reported: Negative, effect decreases with time. Accounts not paid as agreed and/or legal item filed. Your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy
• Employment and residency: Longer time in your job and at your residence can help your score.

How much weight each of these factors has on your score is not disclosed to consumers because it causes more confusion than insight into the credit scoring process. Everything in credit scoring is relative - one negative item can have a small or large impact on your score depending on your credit history. If you have a long and seasoned history of credit and many established accounts, one late payment would have a small impact on your score. However, if you have a short credit history, one late payment would impact your credit history much more. If you have no established credit, you will have no score. Credit scoring requires that you have at least one account that is older than six months and have at least one account that has been reported to the credit bureau in the last six months.

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