Credit Scoring Frequently Asked Questions

For those who prefer the question and answer format, we've prepared the following credit score FAQ to help you better understand what factors affect your credit score.

You can find useful information about credit reports in our
separate credit report FAQ.

1. What is a credit score?
   
2. Who calculates your credit scores
   
3. Who uses your credit scores
   
4. How can I find out my credit score?
   
5. Does everyone have a credit score?
   
6. What kind of information is used in a credit score?
   
7. What kind of information is not used in a credit score?
   
8. Do bank accounts influence my credit score?
9. How many types of credit scores are there?
   
10. What is a FICO score?
    
11. What is a good credit score?
    
12. Can I improve my credit score?
    
13. Will closing credit accounts improve my credit score?
    
14. How often does my credit score change?
    
15. Why would a lender use a credit score rather than a credit report?
16. Will my credit score determine if I get my loan or credit card?
    
17. What can I do if I'm turned down on the basis of my credit score?
    
18. What is a credit inquiry?
    
19. What effect will "shopping around" for a good interest rate on a loan have on my credit score?
    

1. What is a credit score?
   A credit score is a number, from 300-850 derived from variables in your credit report which represents your risk to a lender. It is designed to predict how reliably you will repay loans. Credit bureaus use statistics from thousands of consumers in designing the mathematical model that produces your credit score.
   top
   
   
2. Who calculates your credit score?
   Usually, national credit bureau use information from a consumer credit database to determine your credit score. However, individual banks and lenders may also have their own individual credit scoring systems. The three main credit reporting agencies are Experian, Equifax, and TransUnion.
   top
   
   
3. Who uses your credit score?
   Whenever you apply for loan, mortgage, or credit card, the company or bank considering your account will use a credit score to decide whether to approve your request.
   top
   
   
4. How can I find out my credit score?
   The quickest and simplest way to get your credit score is to visit, Equifax, the largest U.S. credit reporting agency, and request an instant online credit score.
   top
   
   
5. Does everyone have a credit score?
   Credit bureaus calculate credit scores for individuals with one credit account at least six months old and one credit account with activity in the past six months. Savings and checking accounts generally do not count. Credit bureaus need this much information to be able to calculate your credit score.
   top
   
   
6. What kind of information is used in a credit score?
   Credit agencies use information from a consumer credit database to determine your credit score. The information in these databases is supplied by companies and institutions with which you have done business in the past. Other information about your past financial behavior and current financial situation is obtained from public record and used in determining your credit score. Information used to calculate your credit score can be found in your credit report.
   Get a free online copy of your credit reportnow.
   top
   
   
7. What kind of information is not used in a credit score?
   Ethnic origin, gender, nationality, religion, marital status, and receipt of public assistance, cannot, by law, be used in a credit score. Other factors, such as age, education, geographic location, and employment status and history may be used by some credit scoring agencies. These factors are not usually included in a credit score produced by a major credit bureau, but individual lenders may still take them into consideration.
   top
   
   
8. Do bank accounts influence my credit score?
   Generally, savings and checking accounts don't appear in your credit report and aren't used to calculate your credit score. This does not mean that a lender won't consider this information when deciding whether to approve your credit application, but you must provide it yourself.
   top
   
   
9. How many types of credit scores are there?
   There are many types of credit scores, although they are based on roughly the same credit information. The scoring systems can differ widely and there is no universal scoring standard, but the most common kind of credit score (called a FICO™ Score) ranges from 300 to 850.
   top
   
   
10. What is a FICO™ score?
    The FICO™ scoring system is the mathematical model most commonly used to calculate your credit score. All credit bureaus use scoring methods derived from Fair Isaac's methods. Your FICO score provides a summarization of your credit report in numerical form.
    Click here to instantly see your FICO™ score
    top
    
    
11. What is a good credit score?
    Because there are different types of credit scores, with different scoring ranges, it is impossible to give a universal "good" score. The most popular scoring systems use a range of 300 to 850, with average scores falling in the 600 - 700 range.
    top
    
    
12. Can I improve my credit score?
    Absolutely. One of the advantages of a credit score (over a credit report) is that it fluctuates with changes in your financial behavior and emphasizes your recent behavior. You can always improve your score by paying bills on time, keeping balances low, and paying off debts. Read our eight tips to improve your credit score for more advice on improving your credit score.
    top
    
    
13. Will closing credit accounts improve my credit score?
    Paying off debts certainly helps your credit score, but closing accounts with no balance or shuffling debt from one account to another generally does not help your credit score.
    top
    
    
14. How often does my credit score change?
    Your credit score changes frequently. Your financial information is stored in a consumer credit database which is updated regularly indicating your most recent financial payments etc. Your financial behavior, especially recent behavior, is then factored into and reflected in your credit score .
    top
    
    
15. Why would a lender use a credit score rather than a credit report?
    Credit scores are fast and easy and they do a better job of predicting your future behavior than credit reports do.
    top
    
    
16. Will my credit score determine if I get my loan or credit card?
    Your credit score is a part of the information credit card companies or loan officers consider when deciding whether or not to approve your application. Loan officers in particular are interested in many other factors, such as your income, employment record, and the value of your assets. Most credit card companies have different plans and cards for different credit ratings, so if you have a poor credit score, you can probably still get a credit card.
    
    top
    
    
17. What can I do if I'm turned down for credit?
    The Equal Credit Opportunity Act requires that you receive information about why were turned down for credit. This notice should be sent within 30 days. You are also entitled to a copy of your credit report if you request one, within 60 days.
    top
    
    
18. What is a credit inquiry?
    A credit inquiry is made when a prospective or current creditor checks your report. Your credit report contains a section listing all the requests for your report in the last 2 years. Too many inquiries in a short time are considered a bad sign by lenders. Also, they are considered in credit scores, although they are less important than other factors. Credit inquiries made by yourself, an employer, or a pre-approved credit card will not affect your score.
    top
    
    
19. What effect will "shopping around" for a good interest rate on a loan have on my credit score?
    For some particular types of loans (such as car loans), most credit agencies will count several similar credit inquiries made within a close time period (usually 2-4 weeks) as one inquiry. That way, if you want to apply for a loan from several different lenders, your score is not damaged by each lender making a separate credit inquiry.
    top