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Your credit score is a three-digit number that is calculated from your credit report to gauge your reliability as a borrower. It can be used to predict whether you’ll pay back your loans or pay debts on time, and it also helps to determine whether you are generally a good risk for lender.

Credit scores typically range from 300 to 850, and each of the three traditional credit reporting bureaus (Equifax, TransUnion, and Experian) calculates your credit score based on the information it has in your credit report.

The credit reporting agencies don’t seek out information from creditors or lenders, and they can only build your credit report based on the information reported to them. Your credit score is determined by a number of factors in your credit report, including:

  • The number of accounts you have.
  • The types of accounts.
  • Your available credit.
  • The length of your credit history.
  • Your payment history.

It’s important to check your credit report regularly because if any of the information is inaccurate, if any of your accounts are missing, or if there is information that doesn’t belong to you, it can hurt your credit score. If you find inaccurate information, you should immediately file a dispute with the credit reporting agency.

You’re entitled to one free credit report from each credit reporting agency, once a year, from annualcreditreport.com. You can also get your credit score at that time for a small fee. If you want to have more regular access to your credit report and score, you might want to consider a credit monitoring service from one of the credit reporting agencies.

Accurate information is important for your credit score, but any bankruptcies, collections, foreclosures, late payments, or other financial problems can negatively affect it. However, negative information only stays on your credit report a set period of time—usually seven years—so positive behavior like on-time payments and responsible credit usage can improve your score over time.

Read More:
How do late payments affect my credit score?
How long does information stay on my credit report?
How to get your credit report and how to read it

This information is brought to you from original article as follows:
http://blog.equifax.com/credit/how-your-credit-score-is-calculated/

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