A credit score is primarily based on credit report information, typically from one of the three major credit bureaus, Experian, TransUnion and Equifax. Since lenders or banks lend only against your creditworthiness, it does makes sense for you to know what factors determine your credit score.
What Is A Credit Score?
Based on the snapshots of your credit report, credit score is the number arrived to summarize your credit risk. It ranges from 300 to 850 and helps a lender to determine the risk level. Or we can put it like this, if I give this person a loan, how likely is it that I will get paid on time?
There are different methods of calculating credit scores. FICO is one of the most popular credit scores developed by Fair Isaac & Co. The higher is the FICO score the lower is the risk for lender.
What Affects Credit Score?
Your credit reports contains many pieces of information that reveals certain important aspects of your borrowing activities mainly focusing on:
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-> The amount of time credit has been established
-> The amount of credit used versus the amount of credit available
