Definition of a Credit Score

A credit score is the numerical product of your credit history, from the loans that you incurred in college, to the purchases that you make with your credit card, home purchases, auto purchases etc, all make up your credit rating. All are being recorded and filed under one credit history that can come back to haunt a person if they are not careful.

A credit score is used by banks and lending companies to make decisions on your loan applications. With a not so good credit score, you may get rejected for a loan or if you are lucky will be given a fraction of the amount that you are asking, for a higher interest rate and a shorter payment period.

A credit score determines whether a person is reliable enough to be given money on a loan. They are calculating this into the interest rates that they put on the loan. Needless to say, banks and lending companies are cautious.

So again, your credit score depends on a number of different factors. Another of which is your reputation as a borrower. Are you always late with your payments for your credit card? Are you many times knee deep in debt because you cannot seem to get things paid down, and now your interest rates are just too high?

Do you have maxed out credit cards? Have you had any other credit related purchases or loans that you have not paid on, or are still paying off? How many? These will all directly figure into the credit score that you are labeled with.

Other considerations that make up your score is the income that you are currently earning. People who have high income are generally perceived as someone who can handle a loan. Another factor, besides the ability to pay factor, is the amount of overall debt that you have.

To view your current credit report and see where you stand with your overall credit score, start by clicking below.

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