A:

Your credit report is almost like a report card for your debt history. It shows your personal information, including name and address. It also lists all your creditors with current balances, those with paid-off balances from the last 7-10 years, and those accounts that are in arrears. It also lists all the inquiries that have come in for new credit; with those you've applied for coded differently than unsolicited offers. Finally, it records how well you've kept up with your payment agreements with each of these creditors and what your last updated balances were.

The credit score that often accompanies a credit report is a numerical representation of your relationship to credit. To develop your credit score, FICO analyzes your debts against your limits, your history of on-time and late payments, the number of accounts you have, the various types of accounts you have (such as revolving, installment and so on), the length of your overall credit history and the amount of new credit you've been applying or. It takes all of that data and weights it according to a proprietary formula, creating a score that can range from 300-850. The higher your credit score is, the better. A score of 775-850 is like getting an A on your use of credit - and lenders will respond to that by offering you better terms on new loans.

RELATED FAQS
  1. What are the biggest factors that can affect my credit score?

    A credit score is a numeric expression that helps lenders estimate the risk of extending credit or loaning money to people. ... Read Answer >>
Related Articles
  1. Personal Finance

    Credit Repair: How to Improve Your Credit Score

    There is no quick fix for a bad credit score but there are several strategies you can take to improve your credit rating and save money over the long term.
  2. Managing Wealth

    5 Common Misconceptions About Your Credit Report

    Your credit report is one of the most important factors in determining your ability to get loans and new credit and has a major influence on your rates.
  3. Personal Finance

    Should Your Credit Rating Scare You?

    Take the mystery out of credit scores by learning the most important ways it can impact your life.
  4. Personal Finance

    4 Habits That Damage Your Credit Score

    Many common money habits can affect your credit score negatively without you even knowing it.
  5. Personal Finance

    How Bad Is My Credit Score?

    You've seen the number, but what does it mean? Here's how to assess your credit score and get to a better place if needed.
  6. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  7. Personal Finance

    6 Benefits Of Increasing Your Credit Limit

    If you can resist the urge to overspend, then raising your credit limit could benefit you in various ways.
  8. Personal Finance

    Fixing Your Credit Score: A Do It Yourself Guide

    Following these five steps can go a long way toward repairing a low score.
  9. Personal Finance

    Credit Score vs. Credit Report: Which Is Better?

    They sound alike, but can serve very different ends.
  10. Personal Finance

    Take the Right Steps to Build Excellent Credit

    There are several things you can do to protect and improve your credit score.
RELATED TERMS
  1. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...
  2. Bad Credit

    A qualification of an individual's credit history that indicates ...
  3. Credit Score

    A statistically derived numeric expression of a person's creditworthiness ...
  4. FICO Score

    A type of credit score that makes up a substantial portion of ...
  5. Credit Scoring

    A statistical analysis performed by lenders and financial institutions ...
  6. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
Trading Center