What's Your Credit Score?

Based on the information contained in your credit report, you are assigned a credit score. Credit scores typically range between 330 and 830, with the average score in the United States being 678. Most lenders offer more favorable interest rates to applicants who scores are above to well-above average. It's important to understand that credit scores are far from static numbers. They are constantly fluctuating as new information appears on your credit report, or old information is removed.

The good news is, you can now monitor your credit reports and credit scores on a regular basis, and take a positive, proactive stance in managing and improving your credit standing! It all starts with understanding the different parts of your credit report and how each of them are typically "weighted" to determine your credit score:

• Your Payment History accounts for roughly 35% of your overall score. This category would include account payment information on credit cards, retail or department store cards, installment loans, mortgages, finance companies and more. Lenders want to know how many of these accounts are being paid as agreed, or are past due. How long has it been since there are delinquent (or overdue) items? Do you have any public records (bankruptcies, liens, judgments, suits, wage garnishments, collection items in your files? Lenders want to see a consistent record of paying as promised. Paying your bills on time is the number one way you can help improve your credit score.

• Your "Amounts Owed" accounts for roughly 30% of your overall score. This includes the amount of money you owe, or do not owe, on specific accounts, the number of accounts you have with balances, your debt-to-credit ratio (or what proportion of your total credit limit is currently being used), and your installment loan ratio (proportion of balance to the original loan amount. As a general rule, higher credit ratings are achieved by individuals who have substantial credit available to them, and maintain relatively low balances.

• Your "Amount of New Credit" accounts for roughly 10% of your score. For instance, how many recently opened accounts do you have, how many accounts by category, how many of these accounts are delinquent, how long has it been since record of delinquency, and, if you have had credit glitches, have you re-established a positive credit pattern since problems occurred?

• The "Type of Credit Used" accounts for approximately 10% of your score. This category looks at what kind of credit accounts you have (credit cards, department store charge cards, installment loans, mortgages, finance company accounts, etc.), as well as the specific number of accounts in each category and any recent information available on those accounts. Generally, creditors like to see a healthy balance of credit used, and not an over-reliance on credit cards.

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