Your Credit Score

A credit score of an individual is a numerical value that lenders use to determine your eligibility to get any financial favor and also to decide how likely you will repay your debts. Your credit report, in which your repayment history and your earlier debt are listed, is taken into account while preparing your credit score. Fair Isaac Corporation (FICO), the developers of credit score, considers several factors while making your credit score. The picture given below may better illustrate how much percentages of those factors constitute your credit score.



• Your payment history comprises the number of accounts you have paid as agreed;
• Has any of your accounts ever been to Collections?
• Has any of your existing or earlier accounts ever been delinquent?
• How long your accounts have been over the credit limit or past due?

Amounts owed:

• How many existing accounts you have with balances?
• How much of your credit limit has been used by you so far?
• How many accounts you have with a zero balance?

Length of Credit History:

• How long has your account remained open?
• Time since your account remains active.

Types of credit in use:

• Different types of accounts (revolving, mortgage, installment, etc.) you have or had

New credit:

• Number of accounts currently you have or recently opened.
• Any inquiry made on your credit report recently.
• How many new accounts you have opened?

How to improve your credit score?

• Pay your bills by the due date on a regular basis. Pay more than just the minimum payment but Do Not less than the minimum payment. If paid less than the required minimum payment, it will aggravate your credit score further.

• Clear your past due bills, which you might have and remain current. It will help you build good score.

• Do not be late on payment or default a payment. In addition, avoid going over the limit. Both the cases will affect your credit score negatively.

• In case you find it difficult to pay your bills, contact your creditors and arrange any payment plan, which they may have.

• Keep your account balance as low as possible. Use the credit wisely and when required only.

• Pay off your accounts and do not transfer the balance of one account to another. It does not actually help at all. Moreover, opening new accounts will not lower your debt; instead, it will put more burden on your pocket.

• Check your credit report on a regular basis so that it remains without errors. Contact the three major credit reporting agencies (CRA) to remain updated. In case any discrepancy is found in your report, ask the concerned agencies to correct it. It is in your own interest. The contact information of the three credit reporting agencies are as follows:

(Contact numbers of the CRAs as of January 2009)

• Equifax: 1-800-685-1111. Get a free report if your credit is denied in the last 60 days.
• TransUnion: - 800-916-8800 - mail within 6 to 8 business days.
• Experian - 888-397-3742 - receive within 8 to 10 business days.