Credit Scores -- - are They on My Credit Report and What are They

A Credit Article Contributed by Barbara Parker

What is a credit score and is it on my credit report?

A credit score is a number that indicates your credit risk level. A higher number means a lower risk. It's generated By using statistical models and information from your credit report, but your credit score is not stored on your credit file with your credit report. Instead, it's generated when a lender asks for your credit report, and is included in the report sent to the lender. Your credit score in not constant. It changes as the things on your credit report change.

Payment updates or a new account could cause your credit score to rise or fall. There are lots of different scores used. Your score could be different from lender to lender depending on the statistical model they use.

Why are credit scores used instead of my credit report?

Before there where credit scores, lenders had to look over each credit report and decide if they would grant credit or not. They might decide to deny credit based on the judgment that the applicant already held too much debt or to many collections or charge offs. Not only did this method take alot of time, but it was also prone to human error and bias.

Lenders used their own personal opinion to decide whether or not to give credit that was based very little on the applicants ability to repay the debt. Credit scores are objective and consistant, and remove the risk of bias and human error. Therefore, consummers also benefit from the use of credit scores. No matter who you are as a per son, your credit score only tells how likely you are to repay debt based on your past credit and current credit.

Who uses credit scores/reports and how are they used?

If you have bought a car, rented an apartment, gotten a credit card, bought a cell phone, or applied for a job handling a alot of money, then there is a good chance that someone has pulled your credit report and looked at your credit score.

If you have a credit card, the lender uses your credit score to determine whether or not to raise your credit limit or raise your current interest rate.

Buying a car? Most car dealer would like to know what your credit score is upfront, preferably before you even walk through the door.

The credit score has made it easier for a lot of people to get credit cards these days.

Before, it was up to the individual lender, and they used their on rules to try and hedge their risk some. Now the playing field is a bit more even.

What information impacts my credit score?

Late payments of course affect your credit report and score.the length of time you have had credit affects your rating as well. The amount of credit you've used against the amount of credit you have available also affects your credit report and rating. The length of time you've lived at your current address has an effect. Your employment history, unbelievable, effects your credit score and report. Negative information like bankruptcies, Charge-offs, and collections affect your score as well.