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Understanding Credit Scores and Reports

What is a Credit Score?

Credit Scores

A credit score is a number that represents your creditworthiness. It is calculated based on your credit history and other financial behavior. Credit scores range from 300 to 850, with higher scores indicating better creditworthiness. Lenders use credit scores to determine your credit risk and the interest rate you will be charged for loans or credit cards.

Credit Bureaus

There are three major credit bureaus that calculate credit scores: Equifax, Experian, and TransUnion. Each bureau uses a different scoring model, so your credit score may vary slightly between them. The most commonly used credit score is the FICO score, which ranges from 300 to 850. FICO scores are used by 90% of lenders when making lending decisions.

Factors that Affect Your Credit Score

Your credit score is based on several factors, including:

  • Your payment history
  • The amount of debt you owe
  • The length of your credit history
  • The types of credit you have
  • The number of new credit accounts you have opened

Payment history and amounts owed are the most important factors in determining your credit score. Late payments, collections, and bankruptcies can have a negative impact on your credit score.

Monitoring Your Credit Score

It is important to regularly monitor your credit score to ensure its accuracy and to identify any potential issues. You can obtain a free credit report from each of the three major credit bureaus once a year at



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