Education
Learn How Credit Score Is Calculated and More
YOUR CREDIT SCORE
WHAT IS THE CREDIT SCORE AND BENEFITS OF A GOOD CREDIT SCORE
Credit scores are a numerical assessment of a person’s credit history representing their creditworthiness—that is, their likelihood of paying their bills on time. A good credit score brings numerous benefits: low-interest rates on credit cards and loans, better chances for approval, and more negotiating power, among others.
INFORMATION USED TO CALCULATE YOUR CREDIT SCORE CAN INCLUDE:
- The number and type of accounts you have (credit cards, auto loans, mortgages, etc.);
- Whether you pay your bills on time;
- How much of your available credit you are currently using;
- Whether you have any collection actions against you;
- The amount of your outstanding debt; and
- The age of your accounts.
WHAT CAN CAUSE MY CREDIT SCORE TO CHANGE?
Because your credit score reflects the information in your credit report, changes to your credit report may cause your credit score to change. For instance, if you pay your bills late or incur more debt, your credit score may decrease. However, if you pay down an outstanding balance on a credit card or mortgage or correct an error in your credit report, your credit score may increase.
HOW CAN I GET MY CREDIT SCORE?
In some cases, a lender may tell you your credit score for free when you apply for credit. For example, if you apply for a mortgage, you will receive the credit score or scores used to determine whether the lender would extend credit to you and on what terms. You may also receive a free credit score or scores from lenders when you apply for other types of credit, such as an automobile loan or a credit card.
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YOU MAY ALSO PURCHASE YOUR CREDIT SCORE FROM ANY OF THE CREDIT BUREAUS BY CALLING THEM OR VISITING THEIR WEBSITES.
- Equifax: Call 1-800-685-1111 or
visit www.equifax.com/compare-products - Experian: Call 1-888-397-3742 or
visit www.experian.com/consumer-products/personal-credit.html - TransUnion: Call 1-800-493-2392 or
visit www.transunion.com
Public Records
HOW DO PUBLIC RECORDS AND JUDGMENTS AFFECT MY CREDIT SCORE?
Some public records can adversely affect your credit score, so you need to carefully consider whether it is worth going to small claims court versus settling with the other party outside of court.
PUBLIC RECORDS AND YOUR CREDIT SCORE
Public records are legal documents created and maintained by Federal and local governments, usually accessible to the public. Some public records, such as divorces, are not considered by your credit score, but adverse public records, including bankruptcies, judgments, and tax liens, are considered by the credit score. Your score can be affected by the presence of an adverse public record, whether it’s paid or not.
DEALING WITH A JUDGMENT ON YOUR CREDIT REPORT
Judgments will almost always have a negative effect on your credit scores. Before letting a bill or credit obligation get to the courthouse, see if an alternative might work. Reach out to the person or company you owe money to and see if some arrangement can be worked out. If you are dealing with a collection agency or other company, they may be willing to work out an equitable settlement with you as it’s almost always more efficient for them to work with you directly than through the courts.