Many creditors make decisions on whether or not to grant consumers credit based on a credit score.
Typically credit scores range
from around 400-900 the higher your score the more likely you are to get that
loan or credit card you’re looking for.
Your credit history, the number
and type of accounts you have, late payments, collection actions, outstanding
debt, and the age of your accounts are all big factors in your credit score.
Because there are three major credit bureaus Equifax, Experian (formerly a part of TRW) and Trans Union and not all creditors report to the same bureau or bureaus, it is likely that your credit report and credit score will vary from bureau to bureau. It is important to keep on top of your credit report with each of these bureaus so you can dispute any inaccuracies you find that might be hurting your credit score.
Not paying your bills on time, letting accounts go to collections or having declared bankruptcy. Your payment history plays a huge role in your credit score.
Letting outstanding debt catch up with your credit limit. Scoring models will look at the amount of debt you owe and compare it with your credit limit; this will have a negative effect on your score if the amounts are close.
Having recently applied for new credit. Each time you apply for new credit your credit report is drawn by a creditor, this will leave an inquiry on you credit report. Having too many recent inquiries on your credit report will lower your credit score. However requesting your own personal credit report will have no effect on your credit score nor will any creditors see the inquiry.
The amount and type of credit accounts you have. While it is good to have established credit accounts, having several loans from finance companies or too many credit card accounts will have a negative effect on your credit score.