Credit Scoring

Credit and Your Budget

Credit Scoring

Making payments, obtaining new credit, or other credit action can cause your credit score to fluctuate.
Each creditor and lender has a different corporate policy on risk levels. Keeping this in mind, it is important to note that there is not a minimum, or cut-off score, that is universal with all lenders. Lenders and credit experts agree that paying all bills on time as contractually agreed and never taking on more debt than you can afford will positively impact your score.

Each company that produces a score uses different criteria. As an example, FICO scores weigh the information that makes up your credit score as follows:

  • 35% Payment History
  • 30% Amount Owed to All Creditors
  • 15% Length of Credit History
  • 10% Amount of New Credit
  • 10% Types of Credit In-Use

Scores typically range from the 300′s to the 800′s. Lenders equate higher scores with lower credit risk. A credit score is a “snapshot” of your potential risk at the time you requested the credit and is generated based on the information in your credit report at that moment.

Your score may be different from one credit-reporting agency to the next because your credit history may be different at each of those agencies.
Even if all lenders used the same score, each lending institution has its own criteria for approving loans. One creditor may extend you credit with a score of 675 while another lender may deny you credit based on the same score. Your score may affect the type of credit, amount of credit or the interest rate that a lender offers you.

How Do I Review My Credit Report for Errors?

Get a copy of your credit report from any of the following agencies:

Credit Information Services
P.O. Box 740256
Atlanta, GA 30374-0256
Phone: 1-800-685-1111
Web Site:
National Consumer Assistance Center
P.O. Box 2104
Allen, TX 75013-2104
Phone: 1-888-397-3742
Web Site:
Trans Union
National Disclosure Center
P.O. Box 1000
Chester, PA 19022
Phone: 1-800-916-8800
Web Site:

{ 1 comment }

Dalton January 4, 2012 at 9:45 pm

A siplme and intelligent point, well made. Thanks!

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