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Understanding your credit score rating is essential for protection of your personal and business financial standing. A credit score is used by lenders to determine the likelihood of repayment.  Credit scores range from 300 to 850. The higher the number, the better. There are many factors used to determine a credit score.

Understanding Credit Score Importance

A credit score is important for individuals and businesses alike for a number of reasons. A credit score is generally used to assist a potential lender decision process on when to offer a loan and when to reject an application.   It can also impact the interest rates charged on credit cards and loans. A credit score may also determine deposit amunts for utility accounts or  may  be used by potential employers to narrow down job candidates.

What Goes Into A Credit Score?

Understanding credit score numbers requires breaking down the components that go into a FICO score. To arrive at the number, credit bureaus look at these things:

• Payment history on current and past accounts. On-time payments are vital for a strong score.
   
• The amount of outstanding debt impacts a score. The greater the amount owed in comparison to the credit limit on accounts can impact a score negatively.
   
• The length of time credit has been established.
   
• The amount of new credit and/or inquiries into a person's credit.
   
• Other factors, such as mix of types of credit.