Information about consumers and their credit experiences, such as bill-paying histories, outstanding debt, numbers and types of accounts, the age of accounts, and collection actions, is basically collected from a consumer’s credit application and credit report. Creditors compare this information to the credit performance of consumers with similar profiles using a statistical program. The credit scoring mainly depends upon the consumer to pay off debt without being more than 90 days late at any time in the future. Credit scores have many different ranges though the most popular one used by 90% of lenders and creditors in USA is the FICO score and the FICO score range is 300 to 850. You must know the fact that higher the score, the better it is for the consumer because a high credit score translates into a low interest rate, which can save thousands of dollars in financing fees over the life of the loan. You can have more than one score as lenders might use different scores for different products. Different credit scoring formulas are being used. Information is gathered from different credit reporting resources.

You should be aware of the variables affecting your credit score such as, How many credit accounts you have?  How long you’ve had those accounts? How close you are to your credit limit? How much credit you have left? How often your payments have been late?

To raise your score keep in mind following:

• Pay your bills on time, every time. Make sure your payments are on time by setting up automatic payments or set up electronic reminders.
• Don’t get close to your credit limit. Credit scoring models look at how close you are to being “maxed out,” hence try keeping balances low in proportion to your overall credit limit.
• Only apply for credit you need. They look at your recent credit activity as an indicator of your need for credit.
• Don’t close your account. You must know that if you close a credit card account, you will eventually lose all of the available credit you have which will impact your credit scores.
• Don’t gather loans on your single credit card. It might seem to you as a smart thing to do, but in contrast to that, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card. If you want to save money on credit card interest rates then you need to wait until after closing.

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