All About Your Credit Score.

Your credit score may be a mystery to you, even if you are aware how important it is in your life.  Your credit report and credit score matter more than you think and for more than just getting credit.

Your credit report is a history of all your credit activities.  It will contain your name, address, social security number, date or birth, your employer, your phone number, a list of those who have looked at your credit and everything positive or negative about your credit accounts.

This information is very sensitive and private.  Only those with your express permission or legal need are allowed to view your credit report.

It is your credit report that determines your credit score.  Your credit score is a number between 350 to 850, bad to great.  There are different credit scores which may use a range of 500 to 999.  However, most credit granting decisions are made with the FICO credit score which ranges between 300 to 850.  Your credit score number helps those viewing your credit report understand a lot about you.

Your credit is used not only to help creditors decide whether or not to grant you credit, but can be used as a form of identification, determine your insurance rates and guide employers on hiring, firing and promotion decisions.

How is credit scoring calculated?

Credit scoring is a statistically based computerized method for predicting how likely it is that a borrower will pay back a loan before credit is granted.

To make sure you score high with your credit history, it’s important to understand what factors affect your credit score.

Different types of information, known as factors, are gathered from your credit report to make up your credit score. These factors fall into broad categories, such as payment history and outstanding debt.

Credit scoring rates the importance of each category to calculate your credit score.

Credit scores reflect credit patterns over time. An adverse action, like a tax lien or bankruptcy filing, can immediately and significantly impact a credit score.

Several factors can have a negative impact on your credit score:

–        History of nonpayment

–        Public record information

–        Evidence of collection accounts

–        Recent delinquent accounts

–        High balances owed on accounts

–        Credit cards charged to their limits

–        Too many new accounts

Only the applicant’s prior credit history is considered when calculating a credit score. For this reason, credit scoring is considered unbiased. Any factors that would show bias are not allowed.

Your credit score cannot be based on any of these factors: race, gender, age, income level, national origin, sources of income, religion or marital status.

Because income level is not a factor, you could have a low income and a high credit score; or, you could have a high income and a low credit score. It just depends on your credit history.

FICO® scores, developed by Fair, Isaac and Co., Inc., are the most commonly used credit scores today. According to FICO, the various factors used to calculate credit scores can be grouped into five primary areas:

–        Payment history

–        Outstanding debt

–        How long you have been using credit

–        Pursuit of new credit

–        Types of credit in use

–        FICO is one credit scoring company. Other companies may use different factors.

Five sample factors for calculating credit scores are listed below, along with a sample of the importance each factor has to the total score. As you read through the list, think about how your credit might score today.

Payment History: 35%.

What is your track record? Have you made your payments on time?

Outstanding Debt: 30%.

How much do you owe? Do you have a high level of debt? Are you near the credit limit on some or all of your accounts?

Credit History: 15%.

What is the length of your credit history? Has it only been a few years? The longer your credit history, the better.

Pursuit of New Credit: 10%.

Have you made numerous applications for new credit? Are you taking on too much debt?

Types of Credit in Use: 10%.

Do you use a variety of credit types? The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is NOT necessary to have one of each, nor is it a good idea to open credit accounts you do not intend to use.

Each factor is given a weight or level of importance. This weight is assigned as a percentage (such as 35%, as shown in the example above). The score is graded for each factor, and then each factor is multiplied by the weight. Computers calculate credit scores in an instant.

To view a Free Credit Report provided by all three national credit bureaus you can visit You will not be able to see your credit score, just your credit reports.

How to get the best credit score possible

No credit score lasts forever. It changes over time as your credit behavior changes. Think of it as a snapshot of your credit performance at one point in time. Your score can go up or down depending on how you manage your credit.

Your credit score, which is based entirely on your credit report, is the creditor’s most powerful tool for assessing credit risk.  Credit Monitoring and Identity Protection will help protect your efforts.  Be proactive about it!  Use and it’s unrestricted free trial to see your free credit scores.

Smart Credit and its patent-pending Smart Action™ buttons to communicate directly with your creditors for anything you need.

It’s simple.  Just use Smart Credit’s innovative credit report and click on action buttons to talk directly with your creditors to get better interest rates or ask your creditor anything.  No need for phone calls, writing letters or looking up account numbers.  You can fix credit report errors, get goodwill corrections, recover from identity theft, replace a lost or stolen credit card or settle a debt all directly with their creditors.  It’s fast and effective!

Smart Credit’s Always Active Complete Protection gives members the most complete credit monitoring and identity protection available.  It also includes our Rapid Response action button in alerts for the fastest way to stop identity theft.

David B. Coulter – founder and C.E.O. of

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