How Is My Credit Score Determined?

Your credit score is essentially a reflection of your ability to pay back the money you borrow. The better your score is, the easier it will be to take out a mortgage, car loan, lease, credit card or other forms of credit from lenders like banks and stores. Information about your our credit score is contained in your credit report, which is used by lenders to decide whether your request to borrow money should be approved.

There are three major credit reporting bureaus: Equifax, Experian, and Trans Union. Credit reports contain a list of all your lenders and your payment history. Your credit report might also include:

• The companies or people you have applied for credit with.
• Your name, your spouse’s name, your address, and social security number.
• Your annual income and the name and address of your employer.
• Information about any lawsuits, foreclosures, repossessions, and any previous bankruptcies you have filed for.
• Information about any tax liens that have been filed against you for unpaid taxes.

The information in your credit report can be viewed by potential lenders and insurance companies to asses whether it would be risky to lend you money. Some employers use credit reports to evaluate job applicants, while landlords will use them to see how likely you are to pay your rent on time.

All of the information on your report is used to assign your credit score. Your credit score is a number that rates and ranks your worthiness for credit when compared with the public at large. The most well-known scoring systems is the Fair Isaac Corporation (FICO) Credit Score. FICO scores range between 300 and 850. 40% of the population has a score of 690 or lower, while 40% have a score 745 or higher, and just 20% have scores above 780.

The single greatest factor used to figure out your credit score is your debt to income ratio. Even if you don’t have outstanding or an unpaid balance on your credit card, your credit limit will still be added to the debt portion of your debt-to-income ratio. The length of your credit history and the number of recent credit applications submitted to potential lenders also contributes to your credit rating. Applying for credit with too many lenders can negatively impact your credit score.

Do you need help rebuilding your credit? Contact our team of St. Augustine bankruptcy lawyers to talk about what forms of debt relief might be available for you.