Credit Score

We all know what a good credit report is, what makes up your credit rating and what is listed in the credit report. To better understand how we use credit history and credit reports to calculate our credit ratings, we should first take a look at what your credit rating means.

Your credit score is a number based on a combination of your credit history, your current credit rating and your previous credit scores. It is based primarily on the number of credit cards, credit reports, and other credit data available to you. Your credit rating varies depending on the model used and the results obtained from credit reference agencies such as Experian, Equifax and TransUnion.

The last category that your credit rating is made of is related to the type of account that is shown in the credit report. FICO and VantageScore will draw credit ratings from a range of different sources, including credit reports, credit cards, bank accounts and other credit data. There are several different methods to assign credit card score, bank score and mortgage rating. The credit rating is also deducted from FICO and ratings from Experian, Equifax and TransUnion.

Borrowell and CreditKarma offer free credit reports and credit checks, and FICO and VantageScore use pretty much the same type of information to determine your credit rating. When a lender orders a credit report, it may require that credit ratings are based on the information contained in the report. This is a consumer's claim that is recorded in your credit report as a "soft request" and has no impact on your credit rating. A hard query is visible to anyone accessing your credit report and referring to your credit score, but if someone is unable to create a FICO score report (e.g. due to missing credit card or bank account information), VantageScore can be used.

If you get a free credit score on your credit card statement, read the fine print to find out which credit bureaus "scoring models and data are used. Ask your credit card company, as Discover and Capital One offer their own credit checks that you can do yourself.

If you are curious about whether you have a good credit rating, you can check your current credit card statement or check it online. Your credit ratings may come from multiple sources, but they are not included in your free annual credit report. If you receive a free copy of, there is also a way to check if there are credit problems that are dragging down your credit rating.

In order to calculate your credit card, the credit report must contain information about the number of credit cards you use and the amount of debt you owe on that basis. It is recommended that you review your FICO VantageScore credit ratings to get an accurate picture of what lenders are seeing. You can also visit the Federal Reserve Bank of New York or the US Department of Justice for more information.

If the information on your credit report changes, your new credit report based on it will also change. Because your credit rating uses information from your credit report, not just your credit card information, lending can provide a continuously updated basis for how responsibly you handle the credit you are currently using.

For example, a large lender can review your credit report and then use its own scoring model to build a credit score based on that report. There is an alternative to VantageScore, a score that lenders would use, but it is provided by another credit source that uses TransUnion, the credit rating provider.

FICO and VantageScore have some similarities, but they range from 300 to 850, and payment history is the most influential factor in determining your score. According to a recent study by the Federal Reserve Bank of New York, 90 percent of top lenders use the FICO credit score to make lending decisions.

If you find your score is below par, check your credit report to see if there are ways to improve it over time. Your credit scoring model only looks at the balance on your credit report that may have been sent to credit card issuers before the end of the billing period (bills of exchange and balances are often due 21 days later). If you are in better control of your finances and are making the most of your credit potential, you should review your credit report regularly, at least once a month. You can also improve your credit rating by having a lower credit utilization rate (the time you pay back a few credit cards each month).

Sources | | |