Credit Score 101

A recent survey conducted by uncovered that 47% of Americans don’t know their credit scores. That startling percentage suggests that nearly half of Americans not only have no clue what their own credit scores are, but that they are also unaware of what exactly affects their scores and the negative implications of poor credit scores.

It’s important to understand credit scores and how bad ones could cause you problems in future when it comes time to apply for a credit card or a loan. Therefore, the following list reveals the top things everyone should know about their credit scores.

Your Credit Score Will Vary
There are countless formulas for calculating your credit score, so there is a possibility that your credit score may differ slightly depending on the agency that reported your score. Also, your score may vary between the top credit reporting agencies, as each agency could have different information on your report resulting in a different number. Generally, minor differences in your scores will not cause drastic effects though.

Credit Reports Are Not Perfect
The Federal Trade Commission recently reported that as many as 42 million Americans may have errors on their credit reports. While some of these errors could be minor, others could significantly lower your credit score. Request your credit report from each of the three credit bureaus to check for any mistakes. If you find an error, contact the credit bureau and the vendor that incorrectly reported the information. Don’t settle for anything but an accurate report!

Various Factors Can Affect Your Score
Whenever a company inquiries about your credit history, your credit score unfortunately will take a small hit. Also, when you apply for a credit card, retail card, or even a gas card, you may experience a few points shaved off of your score, but making timely payments with these cards will help raise it. Other factors that can alter your score include changing your available credit, closing a credit card, applying for a loan, missing a payment, or filing for bankruptcy. On any given day your credit score could alter as a result of any of these actions.

Low Credit Scores Could Mean High Interest Rates
Because your payment history accounts for around 35 percent of most credit reports, any delinquency will reflect negatively on your score. Credit card companies, landlords, and lenders, among other companies, may not want to offer you service if you have a low credit score. A poor credit score means that you’ve been inconsistent with payments, so they might not trust you to make timely payments. To accommodate your potentially risky behavior, these companies might decide to deny you service, hike up fees and interest rates, or require that you pay a pricey security deposit as collateral.

You Can Improve Your Score Credit
Regardless of whether you have zero credit or terrible credit, there are various ways to rebuild your score. Using a credit card is one option for building credit. Although credit card companies might not provide you with a traditional credit card, you could always look into a secured credit card or a credit card with a co-signer. Focusing on paying your bills on time, and paying off your outstanding debt could help boost your score as well. It won’t happen immediately, but a combination of these efforts will eventually bump up your credit score.

There’s no excuse for ignoring credit, especially if it needs repair. There are always options available for those coping with unfavorable scores. If you need further guidance, don’t hesitate to contact a credit counseling organization or financial advisor for additional information.

Chloe Mulliner is a writer and editor for, an authority website that provides information on credit related consumer services, bad credit unsecured loans, and all things credit.

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