Credit Score is a number usually given between 300-850 based on an individual’s credit reports (Credit History Reports), though there is no fixed rule of arriving at a credit score, but the higher the score the better deals you get from lenders.
Credit scores are directly proportional to your creditworthiness. It is widely accepted that a score of 700+ is considered good and any score less than 600 is considered high risk group. Each event in a person’s credit affects the credit score, and the score change depends upon the significance of the event.
The following factors affect the credit score
1. % of usage of credit utilized.
2. Payment History – If you have paid on time on Credit card, Mortgage or Utilities.
3. Lenght of Credit History.
4. Type of Credit – The more types of credit you have a better score.
5. Recent Credit Enquiries on the Credit Report.
Lenders usually provide credit approvals based on the Credit Score, a good score means instant approvals and an average score will lead to scrutiny and an Bad score often outright rejection.