Your Credit Scores Again

It’s important for every consumer to learn what a credit score is and how to improve it. Most consumers do not know what their credit scores are, but these scores are used in dealings with such diverse agencies as credit card companies, home equity lenders, auto loan lenders, and finance companies when considering appications for credit or loans.

Credit scores are usually calculated by a computer model created, most often, by Fair, Isaac & Company (or “FICO,” leading to the common generic term “FICO score”). A credit score is intended to be a predictive summary of a loan applicant’s credit history. A low score can mean denial of a credit card or loan, or if the application is accepted, a higher interest rate. Also, some lenders use credit scores and other information to set the “price” for processing a loan. Statistically, low credit scores also correlate with other risky behaviors such as fraud and auto accidents.

There a many factors affecting the final credit score. Payment history accounts for 35%. A credit score is negatively affected by a history of late payment of bills, accounts sent to collection...