What is My Credit Score?

Posted on July 16, 2009
Filed Under Credit Tips | Leave a Comment

No single thing, except maybe college, will have quite the financial impact on your life that your credit score does. It determines the interest cost for everything from cars to houses, credit cards to student loans. It plays a role in insurance premiums and adoption screening. Employers use it to decide whether you are “responsible” and governments use it to weed out risky licensees. When your score is good you almost don't notice it – and when it is bad, you can't hide from it's dark shadow. So why, when it is so important, do we spend so little time working to improve it? It is because we don't understand it. This articles focuses on the basics of your credit score. I will address tips for improving your score in a future article.

What is a credit score? A credit score is a numerical ranking system that lenders use to determine how much of a credit risk you are. A credit score is a numeric indication of how likely you are to repay debts such as loans or lines of credit. Lenders use this number to determine how much of a credit risk you are. credit scores also are designed to indicate your creditworthiness in comparison with other consumers. credit scores are based on the data in your credit report and are generated by computers using artificial intelligence. Usually a credit score is between the numbers 300 to 900. The higher your score, the more creditworthy you are to lenders.

Your score is a compilation of several factors. 35% is based on your record of timely payments; 30% on the amount and type of debt you currently have; 15% on your length of credit history; 10% on the number and types of accounts recently opened; and 10% on the mix of account types you currently have open.

Now, Is the system fair? No. Is the system always right? No. But you could spend forever complaining and it wouldn't change the fact that it is the way it is and you must deal with it. It is up to you to keep track of your score and make sure that the items in your report (your credit database) are accurate and verifiable. You, and you alone, have control over your score and your credit history.

Lime Financial's primary objective is to help lighten the weight of debt and credit disarray from the lives of our clients.. Learn more about our Credit Repair and Debt Settlement Services.

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