A credit score is a summary of your credit history. It is used by credit card companies, home equity lenders, auto loan lenders, and finance companies when you apply for credit or a loan. If you have a low score, you may not get a credit card or a loan. Even if you do get a card or a loan, you may have to pay a higher interest rate. Credit scores are most often produced by Fair, Isaac & Co. (FICO).
FICO uses a lot of different credit data in your credit report. This data usually falls into five categories (in order of importance):
All of these categories are taken into consideration, and the importance of any factor depends on the overall information in your credit report. Also, your score considers both the positive and the negative information in your credit report. Some things, such as race, religion, age, salary, occupation, and where you live, are not taken into account.
The range of credit scores is 300-900. The average credit score is around 750. There has been a direct correlation between low scores and high default rates. On the other hand, as your credit score increases, your risk of default decreases. It should also be noted that your credit score may vary from credit bureau to credit bureau (but wide variations are rare).
There are several ways to improve your credit score, including:
A lawyer may be able to help you in determining a feasible plan to improve your credit score. Consulting a lawyer may also be helpful if you believe your credit score is flawed or if you believe there are errors on your credit report.
Last Modified: 06-20-2012 02:21 PM PDTLaw Library Disclaimer
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