What is a credit score? Financial matters can be complicated, but understanding your credit score doesn't have to be. If you have any credit accounts, such as credit cards, loans or enquiries, you have a credit report. Your credit report is a record of how you manage your money. This data is then distilled and calculated to create your credit score. While lenders use these reports to decide whether or not to extend you credit, it leaves a lot of room for interpretation.
How is my credit score calculated? Your payment history, the amount you owe lenders, length of your credit history, the types of credit accounts you maintain, and new credit accounts are factored into your credit score. Your credit score ranges between A and J—where A is the highest score.
What affects my credit score the most? Your payment history is the most important aspect of your credit score, because it shows how you’ve managed your finances, including any late payments. Your credit history is also very important, as it demonstrates how long you've been managing your accounts, when your last payments were made, and any late payments.
What is my credit mix? Your credit mix refers to the different types of credit you have, such as credit cards and mortgages. In addition to your credit mix, the number of accounts you have will also influence your score.
Understanding Your Credit Profile Determining your score is more complicated than just weighing the different aspects of your credit history. The credit scoring process involves comparing your information to other borrowers that are similar to you. This process takes a tremendous amount of information into consideration, and the result is an alphabet your credit score.
Maintaining Healthy Credit We need a track record of how you’ve managed credit before it can calculate a credit score. Typically, six months’ worth of activity will provide enough information to generate a score. As your credit history increases, your score might rise or fall based on how you pay your bills over time.
Check your credit score regularly with Credit Report & Alerts, but don’t let minor fluctuations stress you out. Your credit score is just a snapshot of how you’re managing your credit at a particular moment in time. Paying your bills on time, maintaining low balances and not taking on too much debt can help to rehabilitate your credit profile, resulting in a higher score.