Credit Report Resources

Understanding Credit Scores

Understanding a credit report score and the factors that raise your credit score

Understanding your credit score along with checking your own personal credit information from TransUnion will help you take charge of your credit today.

Understanding credit score

Don't worry, understanding your credit rating score doesn't require any prerequisite courses, but you'll want to be ready to learn about a few tricky factor codes and number crunching. Learn how your credit report is evaluated and how to improve your TransUnion, Equifax and Experian credit scores.

Understand your credit score history

The credit scoring system became prevalent during the 1980's as a way for lenders to quickly evaluate a potential borrower's creditworthiness. The system was found to accurately predict financial risk over time and grew to several different industries. Now credit scoring is used by lenders, insurers, landlords, employers, utility companies and even judges to evaluate your credit behavior.

Calculate Credit Score

Thousands of different credit scoring formulas exist today for various evaluation purposes. Each unique credit scoring system is accurate and correct for its own application. The credit scores you can order online use an algorithm created for consumers that approximates these different formulas. Your online credit score may vary a bit from the score your lender uses, but they should be in the same range.

Credit Score Factor Codes

To calculate your credit score, the basic credit scoring formula takes into account several factors from your credit report. The impact of each element fluctuates based your own credit profile:

Payment history – A good record of on-time payments will help boost your credit score.
Outstanding debt – Balances above 50 percent of your credit limits will harm your credit. Aim for balances under 30 percent.
Credit account history – An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.
Recent inquiries – When a lender or business checks your credit, it causes a hard inquiry and a slight ding to your credit score. Apply for new credit in moderation.
Types of credit – A healthy credit profile has a balanced mix of credit accounts and loans.

Credit Report Score Understanding

To truly understand your credit score, make sure you check your credit scores and credit reports from all three credit reporting agencies: TransUnion, Equifax and Experian. Looking at your scores and reports a few months before your loan application will help you get a complete picture of your credit health. Worried if your credit score makes the grade? If your credit score is above 650 you will probably qualify for a standard loan. Under 650, you may have trouble receiving new credit.

If your credit score is a little low, pay your bills on time, reduce your debt, remove inaccuracies and avoid new inquiries for a few months to give it a boost. Plus, don't forget that your credit score is not the only factor a lender may look at when they are evaluating your financial standing.

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