How Your Credit Score is Tallied
The difference between your credit report and your credit score is important when it comes to talking about your personal credit situation.
Credit Report
This summary overview of your credit history shows potential creditors details like:
- Your banking information
- What types of credit you have used (credit cards, mortgages, student loans), and with which banks
- How long those lines of credit have been (or were) open
- Whether you’ve paid your bills on time
- Any collection agency activity
- Any bankruptcy filings
- How much open credit you still have available to you
- Whether you’ve been making inquiries into opening other lines of credit
By law, you are entitled to a free copy of your credit report once a year from each of the three official credit reporting agencies. You can access all three through: https://www.annualcreditreport.com
Credit Score
A credit score is a shorthand way for potential creditors to rate your credit-worthiness. Your credit report is summed up as a number (between 300 and 900). An algorhythm takes into account your historical behavior across various categories: your bill-paying history, what types of accounts you’ve had, whether you’ve stayed in good standing with past creditors, your total debt, and more. (See the chart at top right.)
The higher your number, the more enticing you are to creditors. As your score drops, your financing rate becomes less ideal. There are several systems used to determine credit score, but the most universally accepted is called a FICO score.
Incidentally, at Centrro, we take your credit score and dial you into the deals that apply to you directly. Check it out.
