Your credit score is a numerical representation that shows your risk level in relation to borrowing. It is calculated based upon a variety of factors including your credit history, repayment patterns, and credit mix. Although credit scores can vary from one bureau to the next, the basic elements remain the same.
Credit history is a key aspect of credit scores. Your history includes the date on which you opened your first accounts, how long those accounts have been open and the dates on which you closed those accounts. Credit history is a better indicator of your ability to repay loans.
Another factor is how much debt you have. The credit bureaus use different algorithms to calculate your credit score. Each one is different. The Fair Isaac Corporation developed the FICO scoring system. It considers three types of debt. If you have an installment loan, a mortgage, or a car-loan, your debt can be included in credit scores.
You should also consider your salary, your age and the number credit inquiries you have made. Although there is no single formula to calculate credit scores, some factors are more important than others.
Finally, you might consider using a third company to generate your credit score. These companies may have their own proprietary scoring systems that can be more accurate. They are often in the same range as FICO's.
Your credit score is based on your credit history. This information is used by lenders and insurers to determine your ability to repay your loans. Your score can change with time. By paying your bills on-time, you can improve your score if you manage your finances well.
While you may find sites that claim they only have one credit score available, this is not the case. Different credit bureaus, as well as the lenders and insurers that use them, use different calculations.
One example is that you may find your score significantly higher than another person with the same total debt but lower score. This can be because of the fact that the higher your score is, the more likely you are to be approved for a new loan. You might also have a low credit score due to a high outstanding balance. On the other hand, your score could be significantly higher if you have recently paid off your debt, or if you have an older loan or credit card.
It is worth noting, however, that some items in your credit report may be less significant than others over time. Public records like bankruptcy and foreclosures can be counted in your credit history. They will not directly affect you score. However, the higher your score, the more negative credit information you have.