Forums/Financial Resources/About the Credit Score & Credit Bureau

What is a credit score?

Support [WilliamPaid]
posted this on September 01, 2011 22:49

In technical terms, a credit score is a numerical expression based on a statistical analysis of your credit files, to represent your credit worthiness.
In WilliamPaid language, a credit score is a number used by lenders, such as banks, auto lenders, credit card companies and landlords to evaluate your ability to pay them back.

 

Each of the major credit bureaus - Equifax, Experian, TransUnion and PRBC - calculate your score based on boat loads of information they collect from companies that you borrow from. And, although they use the widely know FICO® model, credit scores can vary from bureau to bureau.

One thing is consistent - the FICO® score is calculated the following way:

  • Your payment history - 35%
  • The amounts of money you owe - 30%
  • How long you've been making payments (length of credit history) - 15%
  • Number of inquiries - 10%
  • The different types of credit accounts that you use - 10%