CREDIT SCORE FACTS

Types of credit scores
There are primarily two types of scores - consumer scores and lending scores. Consumer scores are generated by individual lenders, who rely on credit reports and other information, such as account history, from their own portfolios.

Why lenders use credit scores
Before credit scores, lenders physically looked over each applicant's credit report to determine whether to grant credit. A lender might deny credit based on a subjective judgment that a consumer already held too much debt, or had too many recent late payments. Not only was this time consuming, but also human judgment was prone to mistakes and bias. Lenders used personal opinion to make a decision about an applicant that may have had little bearing on the applicant's ability to repay debt.

Credit scores help lenders assess risk more fairly because they are consistent and objective. Consumers also benefit from this method. No matter who you are as a person, your credit score only reflects your likelihood to repay debt responsibly, based on your past credit history and current credit status.

Credit score factors
Score factors are the elements from your credit report that drive credit scores. For example, your total debt, types of accounts, number of late payments and age of accounts affect credit scores. Score factors indicate what elements of your credit history most affected the credit score at the time it was calculated.

Score factors are the key to improving risk scores. They tell you what you must address in your credit history to become more creditworthy over time. Score factors are usually very consistent from one score to another, so addressing the items identified by the score factors will help you improve virtually all risk scores.

Lenders must provide consumers with the most significant score factors when they are declined credit.

Find out how you rate with all three major credit repositories.

Learn more at


SeeYourFreeCreditReport.com

RestoreMyCreditReport.com