What Is A Credit Score?*
A credit score is a numerical representation of a person's likelihood of defaulting on a loan, based on that person's credit history and credit habits. Bankruptcies, delinquencies, late payments, the total amount of available credit, the total amount of outstanding debt and other factors are woven into the calculation.

The national credit reporting bureaus--Experian, Equifax and TransUnion--calculate credit scores using algorithms developed by credit scoring companies, then sell the scores to lenders along with credit reports. Lenders use the scores to help them make decisions about whether a loan application will be approved and to determine the interest rate, fees and loan terms that will be offered to that particular applicant.

The thresholds for credit scores vary from lender to lender. A score above 700 nets the most optimal loan terms, while a score in the 500 range pushes the applicant into the subprime lending market. Scores in the 600's have the most flexibility in interest rates and loan terms.
Here are a few tips for raising your credit score:
-- Pay all your bills on time.
-- Don't run your credit cards up to the maximum limit.
-- Don't apply for credit cards all over town.
-- Pay off balances and close credit accounts with care.
-- Keep the credit card you've had for the longest period of time.

* An SRES Article.



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