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credit scoring

Credit Scoring is just one of the many factors that loan officers look at when trying to make a loan. Many people wonder what a credit score is and what does it consist of? Every credit scoring agency uses a different formula to determine your credit score. To help you, here are just a few things that many agencies consider: (Experian, 2010)

  • Payment history (Number and severity of late payments)
  • Type, number and age of accounts
  • Total debt
  • Public Records (bankruptcy, interest in new credit, etc...)

Credit scores do not consider the following: (Experian, 2010)

  • Your salary or employment history
  • Your age
  • Your race, color, religion, national origin, sex or marital status
  • Where you live

Credit scores reflect patterns in your credit payment over time and usually put a bigger emphasis on recent information. Some suggestions on how to improve your credit score include but not limited to: (Experian, 2010)

  • Pay your bills on time. Delinquent payments have major negative impacts on your credit score
  • Keep balances low on credit cards and other "revolving credit"
  • Pay off debt rather than moving it around. Avoid closing unused cards as a short-term strategy to improve your credit score
  • Apply for and open new credit accounts as needed
  • Owing the same amount but having fewer open accounts may lower your credit score

Questions regarding credit scoring or obtaining a free credit report visit

Works Cited

Experian. (2010). Improve Your Credit Score. Retrieved March 1, 2010, from

Experian. (2010). What is a Good Credit Score? Retrieved March 1, 2010, from

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